ROY HARRY COLE & Ors v ANDREW HOWARTH & Ors

A loan contract may be made with a borrower through an authorised agent. The identity of the person receiving the money, the commercial purpose of the borrowing and the parties’ subsequent conduct may establish who assumed the repayment obligation. The source of the funds does not determine the identity of the lender where the money was advanced by an individual from a company account without the company being identified as principal. An email recording agreed terms may evidence or constitute the offer, acceptance and terms of an oral loan agreement. Where the agreed interest is contractually payable, the court may enforce it for the agreed period but may award a different rate thereafter where no contractual term governs post-period interest.

The First Claimant alleged that he personally lent £200,000 to the First Defendant in July 2015, secured by a Porsche, on terms requiring repayment with fixed interest and thereafter daily interest. The First Defendant contended that the Second Defendant was the borrower, or that he acted only as agent for another person, and disputed the agreed fee.

The court also considered the effect of the transfer from the Third Claimant’s bank account, the contemporaneous email recording the loan terms, subsequent repayments and dealings, and a later guarantee signed by the Second and Third Defendants. The central issues were the identity of the lender and borrower, the agreed terms, and the amount recoverable.

1. Identity of the lender. The fact that the £200,000 was transferred from the Third Claimant’s bank account did not make that company the lender. There was no contemporaneous evidence that the company was identified as lender or undisclosed principal. The First Claimant was the lender.
2. Identity of the borrower. The First Defendant was the borrower. The Second Defendant acted on his behalf in negotiating the revised terms. The First Defendant’s receipt of the money, use of it to fund the onward payment, conduct concerning repayment, and the terms of the later guarantee were consistent with that conclusion. The asserted undisclosed-principal case was rejected.
3. Formation and terms. The parties intended to create legal relations. The email sent by the Second Defendant recorded, or constituted confirmation of, the agreed loan terms, and the transfer of the money completed or evidenced acceptance. The agreed terms required repayment of £205,000 within 14 days, including £5,000 interest, followed by interest at £1,000 per day if the loan remained unpaid.
4. Evidence. Because the parties’ recollections had been affected by the passage of time and preparation for litigation, the court relied principally on undisputed matters, inherent probability and contemporaneous documents rather than a general preference for either witness.
5. Relief. Only £30,000 had been repaid, leaving £170,000 principal outstanding. The First Defendant was liable for £5,000 interest to 17 July 2015 and £1,000 per day from 18 July 2015 to 17 January 2016. Interest thereafter was awarded at 2% above bank base rate until judgment. The court declined to award the claimed 8% judgment interest for the pre-judgment period and ordered the parties to agree the calculation.

The judgment describes an earlier summary judgment against the Second Defendant on 26 February 2020. His application to set aside that judgment was dismissed during the present trial. This was a first-instance trial decision; no appellate decision is stated.