Powell v Lowe

Where repayment of a loan is linked to the sale of property, but the agreement fixes no time for sale, a term may be implied requiring renovation and sale within a reasonable time, or making the loan repayable if the borrower fails to achieve that. Such a term is not inconsistent with an express provision postponing repayment until completion. A borrower cannot rely on failures within his control to defer repayment. An appellate court should not interfere with a discretionary costs order merely because it might have reached a different conclusion; the decision must fall outside the generous ambit of reasonable disagreement.

Following the breakdown of their relationship, Ms Lowe claimed that money paid towards Mr Powell’s property was a loan and sought repayment. The trial judge rejected her claim to a beneficial interest but found that the money was repayable as a debt. He ordered repayment because Mr Powell had failed to renovate and sell the property within a reasonable time and had contributed to delays affecting the property.

Mr Powell appealed the repayment order and sought permission to appeal the order making no order as to costs. The central issues were whether the alleged implied terms could be inferred despite repayment being linked to sale, whether the trial judge had made sufficient findings, and whether the costs decision was plainly wrong.

Repayment. Ward LJ dismissed the appeal, and Moore-Bick LJ agreed.

1. The trial judge’s ex tempore judgment was brief and could have contained closer legal analysis, but it had to be read as a whole and with a generous allowance for the circumstances in which it was delivered. Read with the pleadings and the judge’s observations on costs, it sufficiently established the relevant implied obligations and their breach.
2. The agreement linked repayment to completion of the sale but said nothing about when renovation and sale were to occur. To give the agreement business efficacy, and applying the officious bystander approach, it was appropriate to imply a term that the work and sale would be completed within a reasonable time, or that the loan would become repayable if the borrower failed to achieve that.
3. The implied timing obligation was not inconsistent with the express provision that repayment would not occur before completion. That provision identified the event triggering repayment; it did not permit the borrower, who controlled the renovation and sale, to postpone the event indefinitely.
4. Mr Powell could not rely on his own failures, including failure to renovate, obtain the landlord’s consent and meet obligations affecting the property, to argue that repayment had not yet fallen due. The judge was entitled to treat the money as immediately repayable.
5. As to costs, an appellate court should not interfere merely because it might have exercised the discretion differently. The decision had to be plainly wrong and outside the generous ambit within which reasonable disagreement was possible. That threshold was not met.

The appeal was dismissed. Permission to appeal against the costs order was refused.

• Court of Appeal (Civil Division) — [2010] EWCA Civ 1419, 18 October 2010: appeal against the repayment order dismissed; permission to appeal the costs order refused.
• Central London County Court — order of 4 June 2009 by HHJ Dight: Mr Powell was ordered to repay £57,662.80 plus interest, with no order as to costs.