Cook v Consolidated Finance Ltd

Under a loan agreement, contractual interest depends on the amount actually outstanding within the meaning of the agreement. Where legal-cost disbursements have not yet been paid, they do not attract interest merely because the lender is obliged to pay them. Interest runs from actual payment. A separate contractual term may nevertheless allow unpaid disbursements to form part of the principal debt. A fee stated as a maximum may be increased where the agreement permits this because the matter became unduly protracted through the borrower’s failure to cooperate. Whether a judgment gives adequate reasons is assessed in the light of the evidence, submissions and all the circumstances. Reasons are sufficient where the parties can understand why they won or lost.

Following a bankruptcy order, Mr Cook obtained a £1.675 million facility from Consolidated Finance Ltd to fund payments connected with annulment of the bankruptcy. The facility was secured by a charge over his property. The facility letter imposed monthly interest, while associated terms dealt with fees and disbursements.

The Wandsworth County Court found the charge enforceable and assessed the amount due at £146,798.90. Permission to appeal was confined to quantum: the fee cap, payment of legal costs, the date from which interest ran on those costs, and the adequacy of the reasons for the sum ordered.

1. Disposition. The appeal was allowed in part. The challenge to the fee and the principal amount failed. The calculation of interest on the petitioner’s legal costs had to be reconsidered when the account was taken following enforcement of the charge. Interest on those costs was payable from the date on which they were actually paid, rather than from 16 May 2008.
2. Fee. Condition 7 initially limited BPF’s fee to £5,000 plus VAT and disbursements. Its second sentence permitted an increase where the matter became unduly protracted because of Mr Cook’s failure to cooperate. Evidence that he had failed to disclose matters concerning shares worth approximately £300,000, causing negotiations and an adjournment, entitled the court to uphold the increased fee.
3. Legal costs. The Recorder was entitled to find that CFL had provided the money used to pay the creditors. Documentary evidence and evidence of the usual payment mechanics were sufficient even though Mr Seward lacked personal knowledge of each payment. Alternatively, condition 5 permitted sums due for disbursements to be included in the principal amount. That did not, however, make those sums outstanding for interest purposes before actual payment.
4. Adequacy of reasons. The judgment was sufficiently reasoned. The court applied the principles in English v Emery Reimbold & Strick Ltd [2002] 1WLR 2409 and Harris v CDMR Purfleet Ltd [2009] EWCA Civ 1645. Sufficiency had to be assessed with knowledge of the evidence and submissions and in the light of all the circumstances. The parties could understand the basis on which the claim succeeded.

• Court of Appeal (Civil Division): Permission was granted only on limited issues of quantum. The appeal was allowed in part, with the interest calculation on legal costs to be determined by reference to the date of actual payment: [2010] EWCA Civ 369.
• Wandsworth County Court: Mr Recorder Widdup found that CFL had a valid charge and that its claim for repayment succeeded. The amount due was identified as £146,798.90.