ON APPEAL FROM THE HIGH COURT, QUEEN'S BENCH DIVISION
MR JUSTICE BLAIR
LOWER COURT NO: HQ08X01090
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HOOPER
LORD JUSTICE WILSON
| FAHAD AL TAMIMI
|- and -
Mr Mark Howard QC and Mr Neil Mendoza (instructed by Barker Gillette LLP) appeared for the Respondent.
Hearing date: 28 July 2009
Crown Copyright ©
Lord Justice Wilson:
(a) Of the sum of £240,500 for which the judge gave judgment, £202,000 was irrecoverable by virtue of s.1 of the Gaming Act 1892.
(b) Of the said sum of £240,500, £11,000 (of which one half is included in the said sum of £202,000) was irrecoverable by virtue of s.40(1) of the Consumer Credit Act 1974.
(c) Section 140A of the Consumer Credit Act of 1974 was engaged, with the result that the said sum of £240,500 fell to be reduced by an order under s.140B thereof.
(d) The claimant was acting towards the defendant in a fiduciary capacity and the defendant's counterclaim for a direction that, as a fiduciary, the claimant should account to the defendant for all their mutual dealings since December 2002 should have been upheld.
So the four arguments span three branches of the law. On behalf of the defendant Mr Steinfeld QC describes the first argument as the thrust of the appeal and the other three as relatively trivial.
B: THE FACTS
(a) used cash which he already had in his possession; or
(b) bought cash from bureaux de change; or
(c) bought chips from the cashier with one or other of his two personal bank debit cards or with banker's drafts drawn on one of his personal bank accounts.
It was (and remains) unlawful for licensed casinos to sell chips against credit cards: s.16 Gaming Act 1968 (now replaced by s.81(2) Gambling Act 2005).
C: SECTION 1 of the GAMING ACT 1892
"Any promise, express or implied, to pay any person any sum of money paid by him under or in respect of any contract or agreement rendered null and void by the Gaming Act 1845 or to pay any sum of money by way of commission, fee, reward, or otherwise in respect of any such contract … shall be null and void, and no action shall be brought or maintained to recover any such sum of money."
The reference to the Gaming Act 1845 ("the Act of 1845") is to s.18 thereof, which provides as follows:
"All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and no suit shall be brought or maintained in any court of law and equity for recovering any sum of money or valuable thing alleged to be won upon any wager …"
"… as the law stands, it would seem that, if the true nature of the transaction in the present case were that the plaintiffs had advanced money to the defendant for the purpose of lawful gaming, the plaintiffs would have been entitled to succeed." (emphasis supplied)
Mr Steinfeld submits that the court's observation was wrong. Even Mr Howard QC, who appears on behalf of the claimant, concedes that, arguably, it needed some qualification in the light of an earlier decision of this court, to which reference had been made in argument albeit not in the judgment, namely MacDonald v. Green, cited above.
"The distinction is clear enough: a loan which leaves the borrower at liberty to apply the money as he wishes, is not invalidated by the [Act of] 1892, even though it is contemplated by both parties that he will probably pay betting debts with it; but when a loan is hampered by a stipulation that the money is to be used for payment of a betting debt, then no matter whether the stipulation is express or implied or to be inferred from the circumstances, the loan is a payment in respect of the betting debt and is hit by the Act."
"Any promise, express or implied, to [repay] any person any sum of money [lent] by him under or in respect of any [proposed] contract or agreement rendered null and void by the Gaming Act 1845 … shall be null and void …"
Such a reading is not impossible; but it is a stretch.
"Reference was made to the more recent statutes of 1845 and 1892; but they relate to actual gaming transactions, and not to claims for repayment of money lent."
Mr Steinfeld protests that the dictum of Kennedy LJ was too broad. "What," he asks, "about Tatam v. Reeve?" Mr Steinfeld – as usual – has a point. Perhaps Kennedy LJ was loosely regarding a payment by a third party to a winner as part of an actual gaming transaction.
D: SECTION 40 of the CONSUMER CREDIT ACT 1974
"A regulated agreement, other than a non-commercial agreement, if made when the creditor or owner was unlicensed, is enforceable against the debtor or hirer only where the OFT has made an order under this section which applies to the agreement."
It is common ground not only that the claimant was unlicensed and that the OFT had made no relevant order but also that two of the 18 agreements which were the subject of the claim were "regulated" agreements, namely the two loans of £5000. In that both of them were agreements between an individual, namely the defendant, and the claimant by which the latter provided the debtor with credit, they were "personal credit" agreements within the meaning of s.8(1) of the Act (as that subsection then stood); furthermore, in that they were "personal credit" agreements by which the claimant provided the defendant with credit not exceeding £25,000, they were "consumer credit" agreements within the meaning of s.8(2) of the Act (as that subsection then stood); and, furthermore, in that they were "consumer credit" agreements, they were "regulated" agreements within the definition provided in s.189(1) thereof. Thus, unless the two agreements were "non-commercial agreements", they were unenforceable against the defendant. Section 189(1) provides that:
" 'non-commercial agreement' means a consumer credit agreement … not made by the creditor … in the course of a business carried on by him;"
The defendant argues that the two loans were made by the claimant in the course of a business carried on by him. Was the judge entitled to infer from the primary facts that the loans were not made by the claimant in the course of a business and thus to reject the argument?
"A person is not to be treated as carrying on a particular type of business merely because occasionally he enters into transactions belonging to a business of that type."
On any view the transactions between the parties were more than occasional: they took place regularly for almost five years. The claimant cannot, and does not attempt to, repel the argument by reference to s.189(2). But the subsection does not go on to provide that a person is to be treated as carrying on a business when he enters into transactions belonging to such a business more than occasionally. Thus, on the face of it, the regularity of such transactions is a necessary but not a sufficient condition of the carrying on of a business. So how significant a factor is it?
"As regards the test of the frequency with which the relevant type of transaction is entered into, this can be no more than a guide. Regularly entering into a certain type of transaction for the purpose of profit is a good indication that the party doing so is doing so by way of business."
(a) the claimant made numerous loans to the defendant;
(b) they were made over a period of almost five years;
(c) they totalled in the region of £7,000,000; and
(d) a substantial profit, reflected in the 10% fee, accrued to the claimant by virtue of them.
(a) although occasionally he made loans to two others, almost all the claimant's loans were made to only one person, namely the defendant;
(b) the loans were made ad hoc, in response to the defendant's sudden requests for immediate, temporary assistance;
(c) the claimant acceded to the requests because he wanted to foster the goodwill of the defendant as an important client of his bank;
(d) there is nothing to indicate that the claimant would have made loans to persons with whom he was unacquainted;
(e) neither the loans nor the repayments were recorded in writing between the parties;
(f) security for repayment was neither tendered nor sought;
(g) the time for repayment of each loan was never identified;
(h) the 10% fee was not related to the time for which each loan remained outstanding; and
(i) the claimant had no business premises, kept no paraphernalia apt to a business and neither advertised nor otherwise published terms upon which he was prepared to make loans.
E: SECTION 140A of the ACT of 1974
"(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement … is unfair to the debtor because of one or more of the following –
(a) any of the terms of the agreement …"
The order sought by the defendant under s.140B was an order under subsection (1)(c) thereof by way of reduction of the fee of (virtually) 10% referable to the 18 loans. It seems to me (and I will assume) that all 18 of the agreements were "credit agreements" as defined by s.140C(1); for, contrary to the parenthetical submissions of both leading counsel, I can find no basis for concluding that either agreements not made in the course of the creditor's business or agreements for loans exceeding £25,000 are excluded from that definition.
F: THE COUNTERCLAIM FOR AN ACCOUNT
Lord Justice Hooper:
Lord Justice Pill:
"The distinction is clear enough: a loan which leaves the borrower at liberty to apply the money as he wishes, is not invalidated by the Gaming Act, 1892, even though it is contemplated by both parties that he will probably pay betting debts with it; but when a loan is hampered by a stipulation that the money is to be used for payment of a betting debt, then no matter whether the stipulation is express or implied or to be inferred from the circumstances, the loan is a payment is respect of the betting debt and is hit by the Act."
The circumstances were, however, different from the present in that the loan was made to enable an existing gaming debt to be discharged.
"I am satisfied that in order to obtain chips for the Defendant, the Claimant used a variety of methods. Sometimes cash would be brought to the cashier at Les Ambassadeurs Club. Sometimes, bankers' drafts drawn on the Claimant's account with Abbey National would be handed over to the cashier in return for chips. Sometimes he would use his debit card in respect of his accounts at Abbey National and Barclays Bank to obtain cash or chips for the Defendant."