Holyoake & Anor v Candy & Ors

Commercial pressure amounts to economic duress only where it is illegitimate and significantly induces the transaction. A creditor who honestly asserts an accrued claim may threaten proceedings, even where litigation would have grave commercial consequences for the debtor.

The penalty rule applies only to secondary obligations arising upon breach. An agreed price for credit, early repayment or an extension of time is ordinarily a primary obligation. Under the unfair-relationship provisions of the Consumer Credit Act 1974, the court considers the relationship as a whole. High charges do not alone establish unfairness where a sophisticated commercial borrower understood and negotiated the terms.

The claimants challenged a £12 million personal loan made by CPC Group Ltd to Mr Holyoake to finance the acquisition of a London development property. The loan and later agreements produced payments exceeding £37 million, including interest, a minimum profit share and extension fees.

The claimants alleged fraudulent misrepresentation, duress, undue influence, intimidation, abuse of process, unlawful interference, conspiracy, misuse of private information, unlawful data processing and unenforceable penalties. Mr Holyoake also sought to reopen the credit relationship under the Consumer Credit Act 1974. The defendants relied on the contracts and a settlement deed releasing the claims.

The central questions were whether unlawful pressure or other wrongdoing had induced the agreements, whether the payment provisions were penalties, and whether the credit relationship was unfair.

1. The claim was dismissed. The alleged representation that the net asset statement was merely a formality was not proved. Mr Holyoake was bound by the original loan agreement and was in default because his net assets were below £120 million and the statements supplied were substantively unacceptable. Certification did not, however, require the certifying firm to accept personal liability.

2. The defendants deliberately lied about an imminent need to disclose the loan to Investec. Mr Holyoake knew the statements were untrue, so they did not induce the later agreements or cause actionable loss. The principle in Hayward v Zurich Insurance Co plc [2016] UKSC 48 did not remove the need for factual inducement.

3. The agreements were not procured by duress or actual undue influence. The pressure that materially influenced Mr Holyoake was CPC's threat to litigate upon an accrued debt. CPC honestly believed that it could sue and, on the court's findings, had a valid claim. Threatening such proceedings was legitimate, notwithstanding the potentially ruinous commercial consequences. The alleged threats of physical violence were either not proved or did not amount to threats.

4. The claims in intimidation, abuse of process, unlawful interference and unlawful means conspiracy also failed. CPC's proceedings sought repayment or arrangements reasonably connected with repayment. They were not used predominantly to obtain an extraneous benefit. The relevant threats were lawful, and no actionable unlawful means causing loss were established.

5. The data-protection and privacy claims failed. A disclosure made from a person's own knowledge, without deriving the information from stored records, was not processing the information contained in those records. Alternatively, any disclosure to protect CPC's lending position pursued a legitimate interest and caused no material prejudice.

6. The redemption amount, extension fees and later interest were not penalties. The redemption amount was part of the agreed price of the loan or, where payable following default, was proportionate to CPC's legitimate interest. The extension fees and most later interest provisions were primary obligations forming the price of additional time.

7. The settlement deed was itself a credit agreement, or alternatively a related agreement, for the purposes of the Consumer Credit Act 1974. It did not oust the statutory jurisdiction. It was nevertheless a bona fide, legally advised compromise which the court declined to disturb. Considering the commercial relationship as a whole, the later extension fees, although steep, did not make the relationship unfair.

not stated in the judgment.