Promontoria (Pine) Designated Activity Company v Hancock

A claim of unfair relationship under Consumer Credit Act 1974 may be determined summarily. Although the creditor bears the ultimate burden under section 140B(9), the debtor must provide credible evidence giving rise to a realistic prospect that the creditor will fail to establish that the relationship was fair.

There must also be a causative and proportionate relationship between the alleged unfairness and any relief sought under section 140B. A bare allegation, unsupported by evidence of loss or a suitable remedy, is insufficient.

For an assignment under section 136 of the Law of Property Act 1925, the document must be legally effective between transferor and transferee. However, an assignee need not provide the debtor with an unredacted assignment as a precondition to enforcement. Excessive redaction may nevertheless leave a substantial evidential dispute about execution.

The court heard two related matters arising from Mr Hancock’s borrowing from AIB secured over three properties. Promontoria had acquired AIB’s rights and served a statutory demand for the unsecured balance.

DDJ Williams set aside the statutory demand because the heavily redacted deed of assignment did not establish that Promontoria’s signatory had validly executed it. Promontoria appealed.

Separately, HHJ Hodge QC granted Promontoria summary judgment for the debt and possession, refusing proposed amendments alleging invalid assignment, mis-selling, negligence and an unfair relationship under sections 140A and 140B of the Consumer Credit Act 1974. Mr Hancock sought permission to appeal.

The central issues were whether the possession claim could be summarily determined, whether the alleged unfair relationship had any realistic prospect of success, and whether the redacted deed established Promontoria’s title.

1. Permission to appeal. Permission to appeal HHJ Hodge QC’s decision was refused. There was no realistic prospect of establishing error and no other compelling reason for an appeal. The proposed allegations had no prospect of success.
2. Unfair relationship. Section 140B(9) places the ultimate burden on the creditor to prove that the relationship was not unfair. It does not prevent summary determination. Following Axton v GE Money Mortgages Limited [2015] EWHC 1343 (QB), the debtor must adduce credible evidence giving rise to a realistic prospect that the creditor will fail at trial. The court should remain cautious because the issue is fact-sensitive and the burden is reversed.
3. The LIBOR and term arguments did not meet that threshold. There was no objective evidence that LIBOR-linked borrowing was unsuitable or more expensive, or that the debtor had relied on a continuing entitlement to fifteen-year facilities. The facilities relating to the properties had in any event been entered into on short-term terms.
4. Any relief under section 140B must have a causative and proportionate connection with the unfairness found. The court relied on Patel v Patel [2009] EWHC 3264 (QB). The non-specific request for relief, unsupported by evidence of loss or a workable remedy, could not justify reopening the debt or security.
5. Assignment. Section 136 of the Law of Property Act 1925 expressly requires an absolute assignment in writing under the assignor’s hand and written notice to the debtor. It also implicitly requires the document to be legally effective between transferor and transferee. A bilateral commercial deed will ordinarily be intended to bind the parties only when both have executed it, although a deed poll may operate on execution and delivery by the transferor alone. The court applied the reasoning in Bibby Financial Services v Magson [2011] EWHC 2495 (QB).
6. Section 136 does not impose an additional requirement that the assignee provide the debtor with an unredacted deed before demanding payment. The dicta in Van Lynn Developments Ltd v Pelias Construction Co Ltd [1969] 1 QB 607 and English v Promontoria (Aran) Ltd (No.1) [2016] IEHC 662 did not represent the law on that point. However, once execution was specifically challenged and Promontoria had relied on inadequate evidence, DDJ Williams was entitled to treat the evidence as insufficient and the dispute as substantial. Promontoria’s appeal was therefore dismissed.
7. The argument based on an independent covenant in the charges did not make DDJ Williams’ decision obviously wrong. The statutory demand was made under the facility, and bankruptcy is a class remedy for unsecured creditors. The matter was adjourned for submissions on costs and consequential matters.

• High Court (Chancery Division): Promontoria’s appeal from DDJ Williams’ decision was dismissed. Mr Hancock’s application for permission to appeal HHJ Hodge QC’s possession and monetary judgment was refused.
• County Court: DDJ Williams set aside the statutory demand on 14 May 2019 because Promontoria had not sufficiently established valid execution of the redacted deed of assignment.
• County Court: HHJ Hodge QC granted summary judgment, ordered payment and possession, and refused permission to amend the defences on 30 September 2019.