Bevin v Datum Finance Ltd

On an application to set aside a statutory demand, security must be valued on the basis of its immediate forced-sale value. A creditor is not entitled to rely on a higher figure based on future works, a prolonged marketing strategy or an anticipated improvement in market conditions.

At the summary stage, a witness statement alleging an oral agreement should not be rejected lightly. It may be rejected only where the evidence is incredible, and reasons must be given. An allegation of unfairness under the Consumer Credit Act 1974 transfers the legal burden to the creditor. The debtor need not first establish a prima facie case. Where the creditor provides no evidence addressing unfairness, the issue ordinarily requires trial.

Richard Bevin applied for permission to appeal, and appealed, against a Bournemouth County Court decision refusing to set aside a statutory demand served by Datum Finance Ltd for more than £1.2 million. The debt arose from facility letters used to fund property developments and was secured by legal charges.

Mr Bevin alleged that the documents did not reflect an oral partnership arrangement. Alternatively, he alleged that the interest provisions were unfair under sections 140A–140C of the Consumer Credit Act 1974. The Deputy District Judge rejected the partnership case, assessed the secured property at a higher figure and concluded that an unsecured balance remained due. The central issues were whether there was a triable partnership issue, how the security should be valued, and whether the unfairness challenge to interest could be resolved summarily.

1. Outcome. Permission to appeal was granted on the interest issue and the appeal was allowed to that limited extent. Permission was refused on the alleged partnership. The statutory demand remained in force for £23,216.69. The applicant was ordered to pay two-thirds of the respondent’s costs of the appeal.
2. Security valuation. The proper valuation for a statutory demand is the forced-sale value on the assumption that the secured creditor realises the security immediately. The creditor must seek the best price reasonably obtainable in the market at that time. The valuation cannot include hope value from future works or a decision to wait for better market conditions. The Deputy District Judge therefore erred by crediting the security with the enhanced figures suggested by the valuation report. On the correct valuation, an undisputed capital shortfall of £23,216.69 remained.
3. Alleged oral partnership. At a summary stage, a witness statement verified by a statement of truth should not be rejected lightly. A tribunal may reject it where it concludes that the evidence is incredible, but it must give reasons. The court must avoid both automatic scepticism about oral agreements and an impermissible mini-trial. On the evidence, the alleged arrangement was incredible: it contradicted the written facility letters, was raised late, lacked supporting material and would have required Datum to bear the losses while Mr Bevin shared profits. No triable issue arose.
4. Unfairness and burden of proof. Under section 140A(9) of the Consumer Credit Act 1974, once the debtor alleges that the creditor-debtor relationship is unfair, the creditor bears the legal burden of proving the contrary. The debtor need not first establish a prima facie case. Datum had provided no evidence addressing the alleged unfairness of the interest provisions. The issue could not properly be resolved by assumptions about commercial rates or by counsel’s submissions, and had to go to trial.

High Court (Chancery Division). The court heard permission to appeal and the appeal together. Permission was granted only on the interest issue. The statutory demand was affirmed in a reduced amount.