Power Plane Ltd v Kotak

A loan may be established without detailed contractual terms where the evidence shows an intention to lend and an obligation to repay. An appellate court should not disturb a trial judge’s factual conclusion where it is supported by evidence, including accepted and corroborated witness testimony. Adequate reasons may be given through the judge’s explanation of why one body of evidence was preferred over another, together with findings about the transaction’s background and context.

The claimant company had paid £45,000 to the defendant in August 2010. The defendant maintained that the payment was a gift. The county court judge found that it was a short-term loan, repayable on demand or promptly after the advance, and held the defendant liable to repay it.

The defendant renewed an application for permission to appeal. He argued that the judge had applied the wrong law concerning the formation of a loan, lacked evidence for the finding, and failed to give adequate reasons. Permission had previously been refused on the papers.

1. Application refused. The trial judge had correctly considered the relevant principles concerning a loan and applied them to the facts. A transaction may constitute a simple loan even though it contains no detailed terms and conditions, provided the evidence establishes an intention to lend and an obligation to repay.
2. There was ample evidence supporting the finding. The judge accepted Mr Don Kotak’s evidence that the defendant had sought a loan and that the money was obtained from the claimant company as a short-term loan. That evidence was corroborated by the reliable evidence of Mr Clarke and Mr Chattington. The judge was entitled to prefer that evidence over the defendant’s evidence, which she found unreliable.
3. The judge gave sufficient reasons. Her explanation of the competing evidence and her reasons for preferring Mr Don Kotak’s account were sufficient. Her more detailed findings about the source of the funds, the circumstances in which the transaction was arranged, and the earlier loan transaction provided further support.
4. The defendant’s knowledge that the money came from the company, rather than the partnership, supported the conclusion that he understood it to be a loan. The father’s alleged intention that money should be gifted through the partnership did not prevent the company transaction from being a loan.
5. The court agreed with the earlier refusal of permission. The arguments advanced could not undermine the basic factual finding that the payment was a loan.

• Leicester County Court and Family Court: On 17 April 2015, Her Honour Judge Hampton found that the £45,000 payment was a loan rather than a gift and that the defendant was liable to repay it.
• Court of Appeal (Civil Division): Sir Robin Jacob refused permission on the papers. Lord Justice Hamblen refused the renewed application.