Clydesdale Bank Plc & Ors v Wardle & Ors

Under section 140B of the Consumer Credit Act 1974, any remedy for an unfair credit relationship must be proportionate to the nature and degree of the unfairness. A further adjustment is justified only where the claimant has not already been adequately compensated.

Consequential loss must be proved on the balance of probabilities and must be attributable to the unfairness. A claimant cannot recover loss where the relevant business would probably have failed despite the corrected lending terms, or where a property sale failed for reasons unrelated to the lending arrangement.

The proceedings concerned the further adjustment of sums payable by the first defendant to the first claimant following an earlier judgment that their credit relationship was unfair. The earlier order recalculated the debt on the assumption that a fixed-rate loan became variable-rate in January 2013 and reduced the debt to £192,128.07 as at 20 January 2020.

The further issue was whether the defendant would have avoided additional losses by continuing his business after October 2013 or selling his business premises in 2014 or 2015. The court considered whether those alleged losses were caused by the continuation of the fixed-rate loan and whether further relief was proportionate.

1. Remedy under section 140B. The court had jurisdiction under section 140B(a) and (c) of the Consumer Credit Act 1974 to make further adjustments or order repayment. Following the approach in Patel v Patel [2009] C.T.L.C. 249, the remedy had to reflect and be proportionate to the nature and degree of the unfairness. A further adjustment was appropriate only if the existing reduction had not adequately compensated the defendant.
2. Business losses. The defendant bore the burden of proving the counterfactual case. The evidence showed a business in serious financial difficulty, dependent on substantial cash injections and facing additional disruption and financing needs from new vehicle regulations. The saving produced by variable-rate payments would not have bridged the funding shortfall. On the balance of probabilities, the business would still have closed in October 2013.
3. Sale of the premises. The evidence did not establish that the fixed-rate loan prevented the proposed sales. The 2014 offer was not accepted for reasons unconnected with the loan. The 2015 offer failed because the defendant preferred leasing the premises and sought conditions unacceptable to the purchaser. The defendant therefore failed to prove that any loss was caused by the bank or the continued fixed-rate term.
4. Disposition. The defendant had been adequately compensated by the earlier reduction in the debt. No further adjustment was ordered. The bank’s proposed repayment schedule was accepted as a pragmatic alternative, subject to adjustment to reflect the later commencement date of the payment obligations.