Karsten & Anor v Markham & Anor

A loan of money does not require a formal contract or an agreed repayment date. Where money is advanced as a loan and no time for repayment is agreed, the lender is not deprived of the right to recover it.

On a renewed application for permission to appeal, the Court of Appeal will not interfere with a trial judge’s findings based on witness credibility where there was ample evidence for them and no realistic prospect of a different conclusion. Procedural complaints must be supported by the record and relevant evidence. An estoppel point requires a pleaded representation and proof of reliance. Allegations of judicial unfairness or bias require proper evidential foundation.

The dispute arose from a relationship lasting from about 1999 to 2005, during which £850,000 was transferred in several tranches. The claimant said the payments were loans; the defendant said they were gifts. The High Court, after hearing the witnesses, accepted the loan account and ordered repayment. The defendant later sought to challenge that judgment, including by alleging undue influence, procedural unfairness, deficiencies in the loan arrangements, and judicial bias. Permission to appeal was refused on the papers by Patten LJ.

The defendant renewed the application before the Court of Appeal and also sought a stay of the order and the setting aside of a freezing order. The central questions were whether the proposed grounds disclosed any realistic prospect of success and whether any procedural unfairness had been shown.

1. Disposition. Lord Justice Jacob refused the renewed application for permission to appeal. The associated application for a stay and for setting aside the freezing order was consequently refused.
2. Findings of fact. The trial judge had heard and seen the witnesses and gave careful, convincing reasons for concluding that the money was advanced by way of loan and that the defendant had not given honest evidence. There was ample material supporting those findings, and no realistic prospect that the Court of Appeal would reach a different conclusion.
3. Loan arrangement. A loan does not have to be contractual or specify a particular repayment date. The absence of an agreed time for repayment does not mean that money advanced as a loan can never be recovered. The judge treated these as loans between lovers rather than contractual loans.
4. Undue influence. Actual undue influence had not been pleaded. In any event, the point could not assist the defendant once the factual finding was that the money had been advanced as a loan.
5. Procedural fairness. The trial judge acted within his discretion in refusing to permit a party to give evidence by Skype where no proper video-link application had been made, the proposed witness lacked the documents, could not realistically be cross-examined, was himself a party, and had chosen not to attend. The treatment of a disputed document did not create unfairness: an estoppel case required the alleged representation to be pleaded and reliance upon it to be proved.
6. Bias allegation. General accusations that the judge had behaved unfairly or with bias were unsupported by evidence. Correspondence from a party was not evidence of what had occurred, and the failure to obtain a transcript did not establish judicial misconduct.

• Court of Appeal (Civil Division): Patten LJ refused permission to appeal on the papers. Lord Justice Jacob refused the renewed application and the associated applications for a stay and to set aside the freezing order.
• High Court of Justice, Chancery Division: HHJ Raynor QC gave judgment on 17 December 2009 after trying the dispute and finding that the £850,000 transfers were loans rather than gifts. A freezing order was later granted on 14 January 2010.