Pilgrim Rock Ltd v Iwaniuk

Under Consumer Credit Act 1974, the court assessing an unfair debtor-creditor relationship must distinguish attribution from context. Conduct by another person cannot be attributed to the creditor under section 140A(1)(b) or (c) without the required agency or associate relationship. However, section 140A(2) permits, and where relevant requires, consideration of the creditor’s true nature, the transaction’s background and whether the lending was genuinely commercial and arm’s length. A court may therefore assess contractual terms and the creditor’s own enforcement conduct in that context. An appellate court will interfere with remedial variations under section 140B only where the discretion was irrational, exceeded its broad bounds, or proceeded on a material error.

The claimant appealed from an order of His Honour Judge Luba QC in the County Court at Central London. The judge had found the creditor-debtor relationship unfair under the Consumer Credit Act 1974 and varied the terms of a property-development loan.

The claimant, assignee of the original lender’s rights, argued that the court could not consider the relationship between the borrower and the individual controlling the lending companies unless that individual was found to be the claimant’s agent or associate. It also challenged the remedial variation of the loan. The central issues were the scope of section 140A and the proper appellate approach to the exercise of the section 140B discretion.

1. The appeal was dismissed. The judge below was entitled to find the relationship unfair and to vary the loan agreement.
2. Section 140A involves two distinct inquiries. Acts or omissions of another person relied upon as acts or omissions of the creditor require an appropriate basis of attribution, including agency or associate status under section 140A(3). By contrast, section 140A(2) requires the court to consider all matters it regards as relevant, including matters relating to the creditor and debtor.
3. Accordingly, the court could consider the true nature and identity of the lending companies, the circumstances in which the loan was arranged, and the informal joint venture between the controller and borrower. Those matters supplied context for assessing the fairness of the loan terms and the claimant’s own failure to enforce the debt for four years. They were not treated as conduct attributed to the claimant under section 140A(1)(c).
4. Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 concerned attribution of conduct under section 140A(1)(c), particularly the meaning of “on behalf of”. Section 140A(2) had not been in issue there. The decision therefore did not prevent consideration of the wider circumstances of the creditor-debtor relationship.
5. The judge’s variation of the term, interest provisions and compounding arrangements was rationally connected to his reasons for finding unfairness. The appellate test was whether no judge could reasonably have made the order, or whether the discretion had proceeded on a material error. That high threshold was not met.

• High Court (Chancery Division): Pilgrim Rock Ltd appealed an order made by His Honour Judge Luba QC in the County Court at Central London on 15 December 2017. The appeal was dismissed.