Barons Finance Ltd & Anor v Makanju

Permission to appeal out of time may be granted where the proposed appeal has a real prospect of success and the interests of the administration of justice outweigh the importance of finality. This is particularly so where a borrower may not have received legally required information and the lender may have obtained judgment without disclosing material statutory defects.

Non-compliance with the Consumer Credit Act 1974 may render an agreement improperly executed and enforceable only by court order. A lender carrying on consumer-credit business without a licence may be unable to enforce the agreement. A purported agency arrangement does not establish agency merely because it appears in small print, and statutory consumer-credit protections cannot ordinarily be circumvented through unjust enrichment.

The defendant sought permission to appeal out of time against a 2009 Clerkenwell and Shoreditch County Court judgment requiring payment of £10,495.22 and possession of his flat. His later notice of appeal formally challenged a 2012 refusal to suspend possession, but the substantive challenge concerned the underlying 2009 judgment.

He contended that the loan agreement failed to comply with the Consumer Credit Act 1974, that the relationship was unfair under section 140A, and that Barons had acted without the necessary licence. The central issues were whether the proposed appeal had a real prospect of success and whether time should be extended despite substantial delay.

1. Permission and extension of time. The court granted permission to appeal out of time. Although the application was more than two years late, the administration of justice was the decisive consideration under CPR 52.6 and the CPR 3.9 checklist. The defendant had a sound explanation for the delay because he appeared to have been denied information which the law required to be supplied, and the proposed grounds had a real prospect of success.
2. Statutory non-compliance. The standard agreement did not state prescribed arrangements concerning repayments, minimum duration, total charge for credit or APR. It was therefore likely to be an improperly executed regulated agreement, enforceable only by order of the court under section 65 of the Consumer Credit Act 1974.
3. Exemption. The agreement was not a debtor-creditor-supplier agreement within section 12 and did not satisfy the conditions for the claimed exemption under the Consumer Credit (Exempt Agreements) Order 1989. The exemption required, among other matters, no more than four repayments within twelve months.
4. Licensing and agency. Carrying on consumer-credit business without a licence was potentially criminal under section 39. An agreement entered into by an unauthorised person was generally unenforceable under section 40(1), subject to limited exceptions. The small-print assertion that Barons acted as agent for Reddy did not itself create an agency. On the material available, the alleged agency appeared likely to be a sham.
5. Other matters. Finality had little weight in these unusual circumstances. The court also rejected the argument that an unjust-enrichment claim could make reopening unnecessary, since that would substantially circumvent the statutory requirements. The views were provisional because the claimants had not attended and had not yet been heard on the substantive appeal.

The substantive appeal was directed to be heard with other Barons cases on 14 March 2013.

The judgment arose from a proposed appeal against a 2009 Clerkenwell and Shoreditch County Court judgment and a 2012 refusal to suspend possession. Permission to appeal out of time was granted by the High Court.