Clydesdale Bank Plc v Gough (t/a JC Gough & Sons)

A promissory estoppel requires a clear and unequivocal promise that strict legal rights will not be enforced, reliance on that promise, and circumstances making it inequitable to resile from it. A claimed expectation that a secured lender would permit asset sales before enforcing its security must be supported by evidence of such a promise or common understanding. The borrower must also prove actual reliance and, where relevant, detriment.

Under the Consumer Credit Act 1974, a guarantee securing another person’s borrowing is not itself a credit agreement where no credit is provided to the guarantor, but it may be a related security. Any unfair-relationship jurisdiction concerns the relationship between the creditor and the debtor under the financing agreements.

The Bank sought possession of two charged properties and payment of approximately £7 million advanced to Roger Gough, together with payment under Anne Michelle Gough’s guarantee of part of that indebtedness. Roger Gough contended that the Bank had promised, or had come to a common understanding, that he could sell assets to reduce the debt before the Bank enforced its security. He also relied on promissory estoppel and, alternatively, an adjournment under section 36 of the Administration of Justice Act 1970. Anne Gough argued that her guarantee fell within the unfair-relationship provisions of the Consumer Credit Act 1974.

The central issues were whether any relevant promise or common understanding existed, whether it was relied upon, and whether the statutory unfair-relationship jurisdiction was engaged.

1. Estoppel. The claim that the Bank was estopped from enforcing its security failed. The evidence did not establish a clear and unequivocal promise that strict legal rights would not be enforced, or a common understanding that enforcement would be postponed until Mr Gough had sold assets. The contractual documents and contemporaneous communications were inconsistent with that case.
2. Even if such a representation or understanding had existed, Mr Gough did not establish actual reliance. Moving his banking from Barclays was driven by the need to refinance and there was no evidence of a counterfactual alternative. He also failed to prove detriment. The court did not decide whether absence of detriment would independently defeat promissory estoppel.
3. The Bank had in any event complied with the alleged arrangement. Mr Gough had had a reasonable opportunity to propose and conduct asset sales, but chose not to do so. The Bank was therefore not precluded from appointing receivers and enforcing its charges.
4. Consumer credit. The guarantee was not a credit agreement under section 140 C(1) of the Consumer Credit Act 1974, because the Bank provided no credit to Mrs Gough. It was, however, security related to the credit agreements under section 140 C(4)(c). The statutory unfair-relationship jurisdiction concerned the relationship between the Bank and Mr Gough as debtor, not a freestanding relationship between the Bank and Mrs Gough. In any event, the relationship was not unfair. Mrs Gough received independent legal advice and the Bank had not breached any relevant representation.
5. The court declined to adjourn before judgment. An application under section 36 of the Administration of Justice Act 1970 could still be made on the hand-down date, but would require full evidence and worked-out proposals for repayment.
6. The Bank was entitled to judgment for the sums due, possession of Hilltop Farm and The Chestnuts, and dismissal of Mr Gough’s counterclaim. Any mortgagee or receiver taking possession would later have to account for sale proceeds in accordance with the applicable accounting principles.

This was a first-instance decision. The judgment records that permission to appeal against an earlier refusal to permit late amendments was refused by Henderson LJ on 31 August 2017.