Summary

In determining the lawfulness of a loan and supplemental rescheduling agreements, the court considered allegations of fraudulent misrepresentation, duress, undue influence, and extortion under colour of due process. It also considered whether one lender's disclosure to another lender of the existence of the loan was a breach of the Data Protection Act 1998, and whether extension fees of £2.5 million made the relationship between the lender and the borrower unfair for the purposes of the Consumer Credit Act 2006.

Facts

A property developer sought damages of £132 million from the defendants.

The claimant had bought a property to develop. He raised the purchase price through three loans, including an unsecured personal loan of £12 million from the sixth defendant (CPC), a company ostensibly owned by the second defendant. The terms of that loan required him to show that he was worth at least £120 million. Almost immediately, CPC alleged that he was in default because he had overstated his worth. In response to its threats of litigation, the claimant signed a series of supplemental agreements rescheduling the loan. When he defaulted on the payments CPC threatened him with bankruptcy and issued proceedings to secure repayment. The claimant sold the property without developing to repay £37 million to CPC, comprising the loan, interest and extension fees. He brought the instant proceedings to recover that sum, lost potential profit from the development, and damages.

He submitted that the defendants had (1) induced him to sign the loan and supplemental agreements through fraudulent misrepresentations; (2) induced him to sign the supplemental agreements through duress, undue influence, intimidation, extortion under colour of due process, and unlawful interference with his economic interests; (3) entered into an unlawful means conspiracy to obtain property and money; (4) unlawfully processed data by disclosing the existence of its loan to the senior lender in breach of the Data Protection Act 1998 s.4(4), and misused his private information by instructing a private investigator who unlawfully accessed the police national computer to check his criminal record; (5) wrongly imposed penalties; (6) acted in breach of the Consumer Credit Act 2006.

Held

Fraudulent misrepresentation -The claimant had not been induced to enter the loan or supplemental agreements by fraudulent misrepresentation. Cogent evidence was needed to establish fraud. The issue came down to credibility, and both sides had shown themselves to be willing to lie to protect their commercial interests. The claimant's evidence had to be treated with caution, and the documents and inherent probabilities did not support him (see paras 10, 27-30, 34, 40, 43, 73135-141, 385 of judgment). Although the second defendant had told the claimant a series of lies, the claimant had not been deceived by them. That was a complete answer to his claim, Hayward v Zurich Insurance Co Plc [2016] UKSC 48 distinguished (paras 170-175, 238, 386-395).

Duress, undue influence and intimidation - The claimant had not entered into the supplemental agreements by reason of duress, undue influence or intimidation. Remarks by the second defendant warning him to think of his pregnant wife were ill-judged, but were not threats of violence and did not constitute duress to the person. An allegation that the defendants had threatened to sell the debt to collectors who would be prepared to harm the claimant was not made out, and alleged threats to ruin the claimant's life and destroy his assets could not be equated with physical threats. The claimant had signed the supplemental agreements because of the threat of litigation. That threat was justified and did not amount to economic duress, CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All E.R. 714 considered (paras 233, 304-322, 396-402). Although paradigm cases of undue influence concerned the abuse of a relationship of trust and confidence, threats and improper pressure could suffice, Royal Bank of Scotland Plc v Etridge (No.2) [2001] UKHL 44 followed. However the claimant relied on the matters pleaded in support of his failed plea of duress. The claims of undue influence and intimidation could therefore not succeed (paras 404-412).

Extortion under colour of due process - It was not abusive to issue proceedings in the hope of settling on suitable terms, unless a wholly extraneous benefit was being sought or the claimant was pursuing an ulterior purpose or bringing the proceedings as a stalking-horse to coerce the defendant. CPC had been seeking to enforce the loan, and its aim of securing either repayment or new terms did not make its claims abusive. Moreover, although a creditor who threatened a bankruptcy petition in order to extract a collateral benefit would not be permitted to proceed, such conduct would not necessarily amount to extortion under colour of due process (paras 413-416, 420-431).

Unlawful interference with economic interests - The tort required three parties, Emerald Supplies Ltd v British Airways Plc [2015] EWCA Civ 1024 followed. Paradigm cases were where A used unlawful acts to dissuade B from dealing with C, but there were no such unlawful acts in the instant case (paras 432-436).

Unlawful means conspiracy - There was no conspiracy. Although the defendants had negotiated generous terms for themselves, they had not used unlawful means: they had aimed to recover the sums due to them. Charging extension fees to benefit CPC at the claimant's expense was a use of commercial muscle, not unlawful means. Finally, an allegation of blackmail was insufficiently particularised and relied on the same matters as pleaded in support of the unsuccessful duress claim (paras 266-287, 438-450).

Unlawful data processing - CPC must have kept information about the loan on record, and that information was personal data within the meaning of the Act. However, there was no breach of s.4(4): disclosing the existence of the loan did not amount to "processing" data. CPC had not disclosed information from its records, but had simply disclosed information already known to it. The purpose of the Act was to regulate what a data controller did with information stored in a relevant record, not with information in his head. Even if that were wrong, disclosure would have been justified under Sch.2 para.6(2), and the claimant had neither been prejudiced by it nor suffered compensable distress (paras 261, 454-459).

Misuse of private information - A previous court had held that the investigator had not unlawfully accessed the police national computer. CPC had a legitimate interest in discovering whether the claimant had relevant convictions, and its learning, from a public source, that he had no unspent convictions could not have caused him prejudice, damage or distress (paras 463-465).

Penalties - Provisions in the loan and supplemental agreements providing for a redemption sum on early repayment, extension fees, and the compounding of interest upon each new agreement were not penalties. They did not operate on a breach of contract and therefore did not engage the penalty rules (paras 466-488).

Consumer credit - The claimant had settled many of his claims under the Act and those remaining related to extension fees totalling £2.5million. Although the fees had been justified, the court was entitled to take into account their size for the purpose of determining whether the relationship between the parties was unfair, Khodari v Tamimi [2008] EWHC 3065 (QB) considered. The fees were steep and there was no explanation of how they had been calculated or whether they were in line with industry norms. However, they did not make the relationship unfair. The claimant was a sophisticated borrower who was seeking to profit from a business venture, and the Act was not intended to enable the court to intervene in commercial negotiations between such parties (paras 489, 509-524).

Judgment for defendants