England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
ON APPEAL FROM DISTRICT JUDGE NEEDHAM

		Manchester Civil Justice Centre 1 Bridge Street West Manchester M60 9DJ
		26th February 2009

His Honour Judge Hodge QC:

1. In this case I have to decide whether an attempt to reopen a credit agreement as an extortionate credit bargain under sections 137 to 140 of the Consumer Credit Act 1974 is an action upon a specialty for which the relevant limitation period under section 8 of the Limitation Act 1980 is 12 years. It might have been thought that this point had been decided, at least up to the level of the House of Lords, by the decision of the Court of Appeal in the case of Rahman v Sterling Credit Ltd [2001] 1 WLR 496 ("Rahman"). But in the later case of Paragon Finance Plc v Nash [2001] EWCA Civ 1466, [2002] 1 WLR 685 ("Paragon") it was submitted that the Rahman decision had proceeded on the basis of a concession by counsel, and that the case was wrongly decided insofar as it held that the 1980 Act had any application at all to a claim to reopen an extortionate credit bargain. Happily for the Court of Appeal in Paragon, Dyson LJ (with whose judgment both Thorpe LJ and Astill J agreed) found it unnecessary to decide the limitation point, and he declined the invitation to do so: see paragraph 70. Unhappily, in this case that course is not available to me because Miss Lesley Anderson QC (who appears for the defendant and respondent to this appeal, Mr Wright, together with Mr Nigel Clayton of counsel) revives the submission that was advanced in Paragon that a claim to reopen an extortionate credit bargain is not a claim for substantive relief to which any period of limitation applies. For Mr Nolan, the appellant, Mr Clive Freedman QC (who appears with Mr Pepin Aslett of counsel) submits that Rahman is determinative of this issue, that it was correctly decided, and that Mr Wright's claim to invoke the provisions of the 1974 Act relating to extortionate credit bargains is statute-barred.
2. This is an appeal from a decision of District Judge Needham in a claim by a moneylender. In a reserved judgment handed down in writing on 21 April 2008, the district judge dismissed the claimant's application for summary judgment under CPR 24. At a hearing on 12 September 2008 I granted the claimant permission to appeal; and I directed that, at the hearing of the appeal, the appeal court should decide, as a preliminary issue, the question of whether the claim by the defendant borrower to reopen the credit agreement as an extortionate credit bargain was statute-barred. It seemed to me that, provided it was still open to the defendant to challenge the credit agreement as an extortionate credit bargain, that was an issue that could only be determined at a full trial after hearing oral evidence; and that, in such circumstances, for that reason alone the appeal should fall to be dismissed. In that event, it seemed to me that it would be undesirable that I should express any view on the other arguments raised by the claimant in support of his appeal for two reasons: First, because, if the case had to go for trial on the issue of whether the credit agreement was an extortionate credit bargain, the trial judge should not be fettered in his approach to the evidence, and in making relevant findings of fact, by any views that I had expressed, or conclusions that I had reached, as a result of a hearing conducted entirely on written evidence. Secondly, because, having acceded to the defendant's submission that I should dismiss the appeal and send the matter for trial, it would be wrong for me to proceed to adjudicate upon the claimant's challenge to the individual grounds of defence raised by the defendant in circumstances where, ex hypothesi, my decision would be irrelevant to the outcome of the appeal, and where, if any issue should fall to be resolved against the defendant, he might find it difficult effectively to challenge my decision. In other words, at the time of the September hearing, I contemplated that the decision on the preliminary issue might be determinative of the outcome of the appeal. In the event, that has proved not to be the case.

The background

3. The claim was commenced on 7 February 2007 for the recovery of £973,627.35 from the defendant pursuant to an unregulated credit agreement dated 14 November 1994 and a legal charge dated the following day. (The property which is the subject of that charge, 12 Poplar Grove, Knottingley, West Yorkshire, was repossessed by the claimant in February 2007 and forms no part of this action.) The principal sum originally advanced to the defendant was £16,000; and it is common ground that on or about 23 October 1995 £5,000 was repaid from the sale proceeds of one of two other properties that had been charged to the claimant as part of the original loan transaction. However, under the terms of the loan agreement interest fell to be paid at the rate of 3% per calendar month, compounded monthly (equivalent to an APR of 42.5%). Thus, by the time the matter came before the district judge in February 2008, the claim exceeded £1 million.
4. The defence puts the whole purported basis of the transaction at issue. It is the defendant's case that he was induced by the claimant and one Nigel Thompson (who was later convicted for some unrelated fraud) to transfer moneys totalling some £48,000, and derived from pension funds he had invested with Allied Dunbar and Scottish Widows, into the Basdring Pension Scheme, a self-administered occupational pension scheme of which the claimant was one of the trustees (until he was removed on 7 April 1998 by the relevant regulatory body) on the footing that £16,000 would be returned to the defendant in order to assist him in the purchase of 12 Poplar Grove on terms that, on the eventual sale of that property, the defendant would pay 36% of the net sale proceeds to the Basdring Pension Scheme together with a further 6% to the claimant and Mr Thompson in respect of "administrative costs", and that the defendant would retain the balance of the net sale proceeds for himself. The defendant says that, at the insistence of the claimant and Mr Thompson, the transaction that was recorded in the loan documentation was "dressed up" as a secured loan from the claimant in his capacity as a financier and moneylender. By his defence and counterclaim, the defendants seeks to set aside the loan documentation as a sham, or as having been procured by undue influence and/or misrepresentation on the part of the claimant; and he also seeks to have it set aside or reopened as an extortionate credit bargain.
5. Before the district judge, the claimant was represented by Mr Michael Booth QC, leading Mr Aslett, and the defendant was represented by Mr Clayton. The claimant relied upon his witness statements dated 24 January and 27 February 2008. The defendant relied upon witness statements from himself and from Bryan Howard Smith both dated 13 February 2008. The defendant later made a second witness statement dated 7 March 2008 confirming certain further matters of fact upon which his counsel had relied in the course of his address. At the hearing of the appeal, and without objection from either party, I allowed applications to adduce additional evidence in the form of witness statements (with exhibited documents) from the claimant (dated 19 September 2008) and from the defendant's solicitor, Yat Hung Wong (dated 11 February 2009).

The preliminary issue

6. I turn first to the relevant statutory provisions. Section 137 (1) of the Consumer Credit Act 1974 provides that: "If the court finds a credit bargain extortionate it may reopen the credit agreement so as to do justice between the parties." Section 138 sets out the circumstances in which a credit bargain may be found to be extortionate. Section 139 is concerned with the reopening of credit bargains. In particular, section 139 (1) provides that: "A credit agreement may, if the court thinks just, be reopened on the ground that the credit bargain is extortionate - (a) on an application for the purpose made by the debtor or any surety to the High Court, county court or sheriff court; or (b) at the instance of the debtor or a surety in any proceedings to which the debtor and creditor are parties, being proceedings to enforce the agreement, any security relating to it or any linked transaction; or (c) at the instance of the debtor or a surety in other proceedings in any court where the amount paid or payable under the credit agreement is relevant." The powers available to a court in reopening an extortionate credit bargain are set out in section 139 (2). They include (a) directing accounts to be taken, (b) the setting aside in whole or in part of any obligation imposed on the debtor, (c) requiring the creditor to repay the whole or part of any sum paid, (d) directing the return to the surety of any property, and (e) altering the terms of the credit agreement or any security instrument.
7. No limitation period is stipulated in the 1974 Act, so if there is an applicable limitation period, it must be found in the Limitation Act 1980. Section 8 prescribes the time limit for actions on a specialty. By sub-section (1) "an action upon a speciality shall not be brought after the expiration of 12 years from the date on which the cause of action accrued". It is common ground that an action upon a specialty includes an action upon a statute. By sub-section (2), that 12 year limitation period does not affect any action for which a shorter period of limitation is prescribed by any other provision of the Act. Thus, it does not apply to "an action to recover any sum recoverable by virtue of any enactment" for which the lesser period of 6 years from the date on which the cause of action accrued is prescribed by section 9.
8. I turn next to the authorities. In Re Priory Garage (Walthamstow) Ltd [2001] BPIR 144 ("Priory Garage") it was held by Mr John Randall QC (sitting as a Judge of the High Court) that applications to set aside transactions under sections 238 to 241 of the Insolvency Act 1986 (relating to transactions at an undervalue and voidable preferences) are generally actions on a specialty within the meaning of section 8 of the 1980 Act and subject to a 12 year limitation period accordingly; but where the substance of the claim is not to set aside a transaction, but to recover a sum of money, such applications will be governed by section 9, and thus subject to a six-year limitation period. That approach was effectively endorsed by the Court of Appeal, and applied to claims under section 423 of the Insolvency Act 1986 (relating to transactions defrauding creditors), in the later case of Hill v Spread Trustee Co Ltd [2006] EWCA Civ 542, [2007] 1 WLR 2404 ("Hill"). More pertinently, in the earlier case of Rahman, the Court of Appeal (Simon Brown and Mummery LJJ) has held that where a debtor sought, whether by counterclaim or by separate action, to reopen a credit agreement under section 139 of the 1974 Act as an extortionate credit bargain, his claim was an action upon a specialty, for which the appropriate limitation period under section 8 of the 1980 Act was 12 years.
9. As noted in paragraph 1 above, in the later case of Paragon, it was submitted that the decision in Rahman had "proceeded on the basis of a concession by counsel for the borrower that a claim to relief under section 139 is an action upon a specialty, and that it is wrong". Since the Court of Appeal in Paragon had reached the clear conclusion that the debtors had no real prospect of succeeding in their claim under section 139, it was unnecessary for that court to decide the limitation point, and it declined to do so: see paragraph 70. For the defendant, Miss Anderson reserves her position as to whether section 8 was intended to extend to all claims based on statute. Her submission is that, to the extent that Rahman proceeded on the basis of a concession that every claim under section 139 is an action upon a specialty, it is wrongly decided. She submits that the reasoning of Mummery LJ (who delivered the only reasoned judgment) should be regarded as questionable since the precise nature of "an action upon a specialty" was not considered in any detail in that case. The single authority cited in support of the court's decision, Collin v Duke of Westminster [1985] QB 581, concerned the exercise of a statutory right to enfranchise under the Leasehold Reform Act 1967, which creates correlative statutory rights and obligations, and confers jurisdiction upon the court to determine any ensuing dispute. Unlike the 1967 Act, she submits that the 1974 Act merely vests in the court a supervisory jurisdiction to determine and adjust the enforceability of existing contractual rights, which (citing observations of Dillon LJ, with whom Ralph Gibson LJ agreed, in First National Bank Plc v Syed [1991] 1 All ER 250 at 252E) the court can exercise of its own motion, irrespective of any application by the debtor. As such, the jurisdiction falls outwith the scope of section 8. A claim to reopen an extortionate credit bargain is, she submits, not an action for substantive relief for which one would ordinarily expect a period of limitation to apply. Rather, it is an entitlement to invoke the jurisdiction of the court, which one would not ordinarily expect to be the subject of any limitation period. She invokes the analogy of the court's inherent supervisory jurisdiction over solicitors, as to which it has been held (by Warner J in Bray v Stuart A West & Co (1989) 139 NLJ 753) that they are not proceedings founded on any cause of action to which the Limitation Act applies.
10. Miss Anderson also points to the problems which she says are inherent in any attempt to force claims to reopen extortionate credit bargains into the straitjacket of the various limitation periods applied by different sections of the 1980 Act. Can it be right, she asks by way of example, that a debtor who seeks general relief to reopen a credit bargain is subject to the 12 year limitation period under section 8; but if he claims specific relief, in the form of the repayment of sums paid under that credit bargain, his claim is subjected to a 6 year limitation period under section 9? What is to stop the court, when entertaining a generally pleaded claim to reopen a credit agreement which is issued within 12, but more than 6, years after the date of the credit agreement, from deciding to make a repayment order? Problems such as this, she submits, demonstrate the inherent difficulties in attempting to apply differing statutory limitation periods, which were clearly not specifically designed to cater for the types of case that is here in issue. There are, she submits, no obvious reasons of policy to prescribe the time within which the court may choose to exercise its discretion, and good policy reasons for leaving the matter to the court's inherent discretion.
11. The facts of the present case seem to me to demonstrate the undesirability of applying a strict limitation period - even the generous period of 12 years prescribed by section 8 - to a claim to reopen an extortionate credit bargain. When addressing the issue of delay in his witness statement in support of the application, the claimant explained (at paragraph 56) "that I quite often leave loans to 'run' for more than 12 years. Whilst I would not suggest that I am a man of considerable wealth I am financially comfortable and I don't need to recover loan monies in order to meet everyday expenses. I have had many loans, which I have not sought to enforce until something has triggered me to do so, and some current loans are older and have been in default longer than the loan I made to the defendant. This strategy also has the added benefit of allowing me to accrue a limitation defence to the inevitable claims that the relevant credit agreement might constitute an extortionate credit bargain. [Emphasis supplied.] In this case the action was 'triggered' by a letter from the defendant's solicitor [dated 21 June 2006]." Not all credit agreements will be executed as a deed and thus be subject to a 12 year limitation period rather than the 6 year period which applies to claims founded on a simple contract by section 5 of the 1980 Act. However, even in the case of a simple contract, it is possible to conceive of situations in which a debtor may experience difficulty in pursuing a claim to reopen an extortionate credit bargain in circumstances where the creditor is seeking to enforce the agreement in reliance upon the provisions of sections 29 to 31 of the 1980 Act, relating to acknowledgment and part payment. I therefore confess to a natural sympathy for Miss Anderson's submissions. However, I feel bound to reject them as inconsistent with the ratio of the Court of Appeal's decision in Rahman.
12. In Rahman the relevant credit agreement (a legal charge) was dated 5 October 1989. The order of the district judge dismissing the debtor's application for leave to serve a counterclaim seeking to reopen the loan transaction as an extortionate credit bargain had been made on 23 December 1998. The appeal was heard by the Court of Appeal on 21 June 2000; and its reserved judgment was handed down on 20 July 2000. Thus, as Mummery LJ observed at 502C-D, the claim to reopen the loan agreement had arisen less than 12 years previously. It was therefore understandable that counsel for the debtor (Mr John McDonnell QC), when challenging the authority of a long line of reported decisions of district judges to the effect that the relevant period of limitation was 6 years from the date of the credit bargain, should have contended (as recorded at 498A) that the correct period for making an application to reopen an extortionate credit bargain was 12 years from the date of the credit bargain sought to be reopened. There was no need for Mr McDonnell to contend, and it was apparently no part of his submission, that no period of limitation applies to a claim to reopen an extortionate credit bargain. Inevitably, arguments have been advanced before me on behalf of the defendant that were not raised on behalf of the debtor in Rahman.
13. However, it does not follow from the fact that counsel in Rahman did not seek to argue that no period of limitation applies to a claim to reopen an extortionate credit bargain that I can effectively treat the Court of Appeal's decision in that case that section 8 applies a 12 year limitation period to such a claim as having been reached per incuriam and decline to follow it accordingly. In the course of his leading judgment in Rahman (with which Simon Brown LJ, as the only other member of a two-man court, expressly agreed) Mummery LJ (at 502A-B) cited the following passage from the judgment of Oliver LJ (with whose judgment both May LJ and Sir Roger Ormrod agreed) in the earlier case of Collin v Duke of Westminster at 602D-E:

"It seems to me to be quite clear that in the instant case any cause of action which the applicant has derived from the statute and the statute alone. Apart from the statutory provisions he could have no claim and it is only by virtue of the statute and the regulations made thereunder that there can be ascertained the amount of the purchase price to be paid under the statutory contract the terms of which can be gathered only from the sections of the Act and the Schedules."

Mummery LJ continued (at 502B-D):

"That reasoning applies to the statutory right of a borrower to make application to the court under section 139. The cause of action arises out of and only out of those provisions of the 1974 Act. Apart from those provisions, Mr Rahman would have no right to have the loan agreement reopened in that manner.

It follows that, in so far as Mr Rahman seeks, whether by counterclaim or by separate action, to make a claim to reopen the loan agreement under section 139, that claim is not barred by limitation: that cause of action arose in 1989, less than 12 years ago. If he is successful in his claim, the court may make an order relieving him in whole or in part from the obligation to make future payments."

Mummery LJ went on to recognise that if the debtor were to claim repayment of sums of money already paid by him under the credit agreement, an objection could be raised that section 9 applied and that the limitation period would be six years. Counsel for the debtor acknowledged that the counterclaim would be amended to exclude any claims for the repayment of moneys.

14. In my judgment, it was an integral part of the Court of Appeal's reasoning and decision in Rahman (by which I am bound) that a claim to reopen an extortionate credit bargain constitutes a statutory cause of action within the meaning, and for the purposes, of section 8 of the 1980 Act. As such, a 12 year limitation period applies unless the claim expressly extends to the repayment of money previously paid under the credit bargain, in which event the application will be governed by section 9 and subject to a 6 year limitation period accordingly. The subsequent decisions in Priory Garage and Hill demonstrate that the applicable period of limitation may change depending upon the nature of the relief that is claimed. Speaking for myself, I have little difficulty in understanding why a shorter period of limitation may be appropriate where the relief sought is the repayment of sums previously paid by the debtor to the creditor rather than the future regulation of the loan relationship between them.
15. Whilst I acknowledge that the statutory provisions that were considered in Priory Garage and in Hill conferred a free-standing right upon a person who was not a party to an existing contractual relationship, whereas the statutory provisions that are in issue in the present litigation affect an existing contractual relationship of debtor and creditor, I do not consider that that consideration means that those decisions are of no assistance in resolving the issue that is before me: it is the statutory source of the right to relief that is the relevant consideration rather than the identity and characteristics of the person upon whom it is conferred.
16. I derive no assistance from the observations of Dillon LJ in First National Bank at 252E to the effect that he had considered whether it would be right for the Court of Appeal, of its own motion, to direct an issue, to be tried in the lower court, as to whether or not the transaction, which had never thus far been challenged by the debtors on that basis, was an extortionate credit bargain within the 1974 Act. My reasons are: (1) that the court in that case in fact declined to direct the trial of such an issue; (2) that the relevant credit agreement had been entered into in 1986, only some 4 years earlier, and therefore no limitation issue arose; (3) that the debtors appeared as litigants in person; and (4) that the court does not appear to have referred to section 139 (1) of the 1974 Act (cited at paragraph 6 above) which appears to require some positive action on the part of the debtor before the court will entertain an application to reopen a credit agreement as an extortionate credit bargain. I do not consider that Dillon LJ's observation (albeit contained in a reserved judgment) to amount to a considered analysis of the nature of the jurisdiction conferred upon the court by the relevant provisions of the 1974 Act. Nor do I derive any assistance from Warner J's decision in Bray since that was directed to the inherent jurisdiction of the court over solicitors whereas I am concerned with a jurisdiction that would not exist but for the relevant provisions of the 1974 Act.
17. It is clear from his judgment in Rahman that Mummery LJ had no difficulty in equating the statutory right of a borrower to apply to the court under section 139 of the 1974 Act with the notion of "an action upon a speciality"; nor did he have any difficulty in identifying "the date on which the cause of action accrued" as the date of the credit agreement which it is sought to reopen. In my judgment, he was right on both counts. So far as the former point is concerned, section 38 (1) of the 1980 Act defines "action" as including "any proceeding in a court of law". Whichever of the three routes provided by section 139 (1) of the 1974 Act is adopted for the purpose of reopening a credit agreement as an extortionate credit bargain, some positive action on the part of the debtor appears to be required, thereby satisfying the requirement of some "proceeding in a court of law". Here the claim to reopen the credit agreement has been raised in the defendant's counterclaim; but Mr Freedman has referred me to paragraphs 10.2A and 10.3 of the (amended) Practice Direction under CPR Part 7 which requires a debtor or surety who intends to apply for a credit agreement to be reopened after a claim on or relating to the agreement has already begun to serve written notice of his intention on the court and every other party to the proceedings within 14 days of the service of the claim form upon him, whereupon he will be treated as having filed a defence for the purposes of the Consumer Credit Act procedure. So far as the latter point is concerned, I have struggled in vain to identify any other possible candidate for the date on which the debtor's cause of action to reopen the credit agreement as an extortionate credit bargain could be said to have accrued; and Miss Anderson was unable to offer any convincing alternative to the date of entry into the credit agreement itself. Such an approach is consistent with the emphasis accorded by Dyson LJ in Paragon (at paragraph 66) to considering matters "as at the date when the credit bargain is made, and at no other time" when determining whether a credit bargain is extortionate. (Although strictly unnecessary for the purposes of this decision, and without having heard any argument on the point, I acknowledge that if the claim is one to recover a sum of money previously paid to the creditor, and is therefore subject to the 6 year limitation period prescribed by section 9, time may not begin to start running until the payment has been made.) I should add that, following the well-known observations of Diplock LJ in Letang v Cooper [1965] 1 QB 232 at 242-3, it is clear that "a cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person". The entry into a credit agreement clearly satisfies this requirement.
18. For all of these reasons, I therefore conclude that a claim to reopen a credit agreement as an extortionate credit bargain is an action upon a specialty to which in principle, and subject to section 9 (and the other provisions) of the 1980 Act, a limitation period of 12 years from the date of entry into the relevant credit agreement applies. I reject the submission (apparently founded upon two pre-Rahman articles) at paragraph 3H-323 of the current (2008) edition of volume 2 of Civil Procedure, that "the Limitation Act has no application all where the debtor makes the application to re-open the credit agreement (e.g. to be relieved of the obligation to pay a sum) as part of his defence" (whilst acknowledging that it may apply to a claim or counterclaim). I accept Mr Freedman's submission that the notion that the debtor is making an application to reopen the credit agreement simply as part of his defence reflects "confused thinking". It is not the form of the application that matters but rather its substance: the debtor who seeks in his defence to reopen a credit agreement as an extortionate credit bargain is necessarily making a claim for relief pursuant to the jurisdiction conferred on the court by the relevant provisions of the 1974 Act.
19. The defendant seeks alternatively to rely on the provisions of section 32 of the 1980 Act, which has the effect of postponing the limitation period in cases of fraud, deliberate concealment or mistake until such time as the person invoking the section has discovered the fraud, concealment or mistake or could with reasonable diligence have done so. Insofar as the defendant seeks to reopen the credit agreement as an extortionate credit bargain, I accept Mr Freedman's submission that this is not an action "based upon" the claimant's fraud (within paragraph (a) of section 32 (1)) nor is it one for "relief from the consequences of a mistake" (within paragraph (c) of the same subsection). On the basis of the material which is presently before me, I confess to some difficulty in understanding how the defendant can realistically assert that any fact relevant to his right to reopen the credit agreement as an extortionate credit bargain was deliberately concealed from him by the claimant so as to enable him to invoke paragraph (b) section 32 (1): either his claim that the loan documentation was a sham succeeds (in which event there is no credit agreement to reopen), or it fails (in which event the factual basis for a plea of deliberate concealment is missing). Similar reasoning applies to the defendant's allegations of deceit and undue influence which, if successful, would lead to the setting aside of the loan agreement. It also seems to me that the defendant may find it difficult to resist the conclusion that, with reasonable diligence, he could have discovered any fraud, concealment or mistake in or about October 1995 when his solicitors, Inesons, received the correspondence and loan statement from the claimant which tended to indicate that he was intending to stand by the strict terms of the loan documentation. However, I am conscious that the defendant's invocation of the 1980 Act is particularly fact-sensitive; and, for this reason, if the claim is one that should otherwise go to trial, then my decision on the preliminary issue should not be taken to preclude the defendant from seeking to rely upon section 32 by way of escape from my decision that his claim to reopen the loan transaction as an extortionate credit bargain is otherwise statute-barred.

The appeal

20. I therefore turn to the appeal itself. I should allow the appeal if I am satisfied that the district judge's decision was wrong or if it was unjust because of a serious procedural or other irregularity in the proceedings of the lower court. At paragraphs 1 to 4 of his judgment, the district judge summarised the issues in the proceedings and the nature of the application and the supporting evidence that was before him. At paragraphs 5 to 9, he set out the background to the dispute. At paragraphs 10 to 15, he referred to certain "circumstantial matters". At paragraph 16, he reminded himself of the applicable legal test. At paragraphs 17 to 21, he summarised the claimant's submissions, concluding with the statement that "in the light of my analysis of the factual background in the context of the application, I do not propose to deal with each submission by either Mr Booth or Mr Clayton". At paragraphs 22 to 25, the district judge summarised the defendant's submissions. District Judge Needham's conclusions were set out at paragraphs 26 and 27 of the judgment, which I reproduce in full:

"26. I have no doubt whatsoever that the claimant's application should fail and that the whole issue should be put to the test at a trial. The circumstances in which the documentation came to be signed on 14 November 1995 is an issue between the parties. I note that in the second witness statement of the claimant no comment is made by him on the defendant's evidence. I find that surprising. Instead the claimant concentrates on the resolution, so far as he was concerned, of the previous proceedings brought by Mr Allan and also the letter dated 12 May 1998, the author of which is disputed. Strangely he does not deal in any way with the events before, at and after the visit on 14 November 1995 of the parties to the offices of Inesons. There is also an issue between the parties as to the status of those documents. The defendant says, in terms, they are not to be taken at face value. The real agreement between the parties was for a profit-sharing deal on the sale of 12 Poplar Grove and that there was no question of any interest being paid under the loan agreement, yet alone cumulative interest rate of 42.5% in the event of default and a loan of £16,000 morphing into an indebtedness of over £1 million with interest running at £960 per day. It is also a curious fact, that cannot go unremarked, that proceedings were left to be issued two days before the expiry of the limitation period.

27. There is no absence of reality here which entitles the claimant to judgment under Lord Hobhouse's test. All matters excite such disquiet that a trial to resolve the issues is the only proper course to allow. The scheme proposed by the claimant and Mr Thompson to the defendant appears as conceived in corruption. Issues of fact between the parties are as stark and fundamental as one could find."

21. The grounds of appeal in relation to the district judge's substantive decision are set out in 5 numbered paragraphs. (A sixth ground of appeal relates to his order that the claimant should pay the costs of the summary judgment application. Pending the outcome of the appeal on the substantive decision, I have not heard any oral argument on this point.) The claimant's skeleton argument in support of the appeal (signed by Mr Freedman and Mr Aslett) extends to some 90 paragraphs and 25 pages. The claimant also relies upon further skeleton arguments (again signed by both counsel) directed to the preliminary issue (27 paragraphs over 12 pages) and the additional evidence (13 paragraphs over 5 pages). The skeleton argument for the defendant (signed by Miss Anderson and Mr Clayton) extends to 49 paragraphs covering some 18 pages. The oral submissions occupied 1 full day and some 1 ½ hours on the second day. I do not intend to burden this judgment by attempting to reproduce the parties' submissions in full; but I have borne all of those submissions (both written and oral) firmly in mind in preparing this written judgment.
22. I have been taken at length to a number of authorities by way of guidance on the approach that the court should adopt when considering a summary judgment application. On this aspect of the case, I have been referred to the following decided cases: (1) National Westminster Bank v Daniel [1993] 1 WLR 1453 at 1456D-F and 1457D-F per Glidewell LJ; (2) Swain v Hillman [2001] 2 All ER 91 at 92J and 95B per Lord Woolf MR and at 96B-C per Judge LJ; (3) Three Rivers DC v Bank of England (No 3) [2001] UKHL 16, [2003] 2 AC 1 at paragraphs 95 per Lord Hope, 143 per Lord Hutton, and 158 per Lord Hobhouse; (4) ED & F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at paragraphs 8 and 10 per Potter LJ; and (5) Nationwide BS v Dunlop Haywards Ltd [2007] EWHC 1374 (Com) at paragraphs 8 and 9 per Simon J.
23. For the claimant, Mr Freedman submits that, whilst it is trite law that the court ought not to conduct a 'mini-trial' in reaching its conclusion, this does not mean that the court must take at face value, and without analysis, everything that the defendant says in his statements before the court. Where it is clear that there is no real substance in factual assertions which are made, particularly where those assertions are flatly contradicted by contemporaneous documents, the court should grant summary judgment. In the instant case, it is said that virtually all of what the defendant says is contradicted by contemporaneous documents, as well as documents created by him (or on his instructions) years later. The underlying reality, from which it is said that there is no escape, is that because of the contemporary documents, both at the time and consistently thereafter, the purported defences are in fact fanciful and incredible. It is said that the defendant fails to satisfy the test as to each alleged defence having a real prospect of success. It is therefore submitted that the only proper conclusion is that summary judgment ought to have been given against the defendant, particularly bearing in mind the defendant's 'shifting position'; and his seeming necessity to plead what are contrary positions - notably fraud as opposed to being "in" on a supposed sham - means that the defences are nothing but incredible. It is said that it is misguided to suggest that, simply because there are allegations of fraud, the defendant should be entitled to a full trial. Even where serious allegations are made, there is said to be no good or compelling reason to have a trial if the judge, on a summary determination, can justly dispose of the point. The various defences raised by the defendant amount to nothing more than a collateral matters designed to throw the court "off the scent".
24. Mr Freedman's principal objection to the judgment of the court below is its failure to recognise that there was no real prospect of success in the purported defences and no compelling reason for the case to go to trial. The first and obvious gateway to this conclusion is said to be the way in which the matters relied upon, and the defendant's shifting position, were incredible, and contradicted by the contemporaneous documents. That by itself, it is said, should have been dispositive of the matter. But it is said that there was another route to the same conclusion. The district judge could, and it is said should, have dealt with the matters raised by the defendant point by point. The approach that he adopted of addressing globally the facts and the law is said to have been an error in itself. This was fundamental in that had the district judge adopted this approach, it is said that he would have exposed for himself the fundamentally flawed nature of the purported defences, which it is said do not stand up to any form of scrutiny. There are no bones, and thus no flesh to be put on the bones. It is said that District Judge Needham fell into error in taking the broad brush approach that he did of dealing with the issues in a blanket fashion rather than considering the reality of the defendant's purported defences point by point as matters of law. For those reasons, the claimant seeks a rehearing of the application. Alternatively, and on the basis of an appeal by way of review, he submits that the appeal should be allowed. Mr Freedman also submits that the district judge should, in any event, have analysed each of the purported defences and identified those which did not withstand scrutiny, and so should not go to trial. By not embarking upon the case in this manner, the district judge is said to have acted contrary to the overriding objective and the court's own duty to manage the case effectively.
25. For the defendant, Miss Anderson refuted the claimant's submissions that District Judge Needham was wrong to conclude that all of the issues should be determined at trial, and that he erred in law in failing to deal with the discrete issues raised by the defence and in deciding that a trial was necessary. She submits that the approach that he adopted was an entirely proper one, which accords with the authorities. Against the background of the claimant's unexplained involvement in, and dealings with the assets of, the Basdring Pension Scheme, involving resort to subterfuge and the creation of false documents, and the extraordinary outcome whereby an original loan of £16,000 (of which £5,000 was admittedly repaid after about a year) is said by the claimant to have given rise to a claim in excess of £1 million, with interest running at a rate of £960 per day, Miss Anderson's submits that it is scarcely surprising that this very experienced district judge held that the case was not one that was suitable for summary determination. She submits that he was absolutely right to conclude that there were matters which excited disquiet. She submits that, far from being the case that this conclusion was likely to be dispelled by a point by point analysis of the defendant's case, such analysis was only likely to confirm the disquiet. Issues of fraud ran throughout the entire case, which is quite simply that the claimant is lying. Unless the court thinks that there is absolutely no merit in the defendant's version of events, she submits that the case can, and should, go to trial in order to enable the evidence to be fully and properly investigated after, and in the light of, full disclosure. This is said to be quite apart from the number and complexity of the legal issues involved, in respect of which it is submitted that the defendant plainly has a real prospect of success. In short, Miss Anderson says that the claim is plainly one that is not susceptible to summary determination.
26. In the course of her oral submissions, Miss Anderson acknowledged that the defendant's case is inconsistent with the contemporaneous documents. But the whole thrust of his case is that the documents themselves are part and parcel of the scam that was being perpetrated upon him. The court simply cannot take the documents at their face value because they were devised to deceive. The starting point is not, as Mr Freedman urged upon the court, the fact that the monies advanced to the defendant came from the claimant but rather the prior undisputed fact that, shortly before the purported advance, the defendant had transferred sums totalling some £48,000 from reputable pension fund holders (Allied Dunbar and Scottish Widows) into an occupational pension scheme operated by the claimant on behalf of the employees of a company with which the defendant had no apparent connection. Mr Nolan - a man who, she says, has suppressed documents and engaged in sham transactions - simply does not deign to address this aspect of the background to the case in his evidence. Miss Anderson acknowledges that I may entertain real scepticism about the defendant's account of events, and that there would be good reason for that scepticism were it not for the contra-indications resulting from the claimant's dealings with the Basdring Pension Scheme, its assets and its members, and his apparent willingness to resort to subterfuge and to the creation of false documents. She submits that the district judge was absolutely right to conclude that detailed investigation of the individual defences would not affect the position that this is a case that should go to trial.
27. Both counsel addressed me at length as to the facts, and the evidence, in the case. It is not possible, in this judgment, to do full justice to Mr Freedman's cogent and forceful submissions on the documentary evidence and the implausibilities inherent in the defendant's shifting evidence and case. I do not propose to address the individual points made by Mr Freedman; but I have borne all of them firmly in mind. Having formed the clear view that this is a case that should go to trial, it is undesirable for me to say more than is really necessary to explain to the claimant the reasons why I consider that this appeal should be dismissed, particularly since it is possible that I may be the trial judge: I intend to create no hostages to fortune for either party, nor do I wish to be seen to be in any way contributing to the future development of this litigation.
28. It might be thought sufficient for me to say that I entirely agree with the conclusions expressed by the district judge at paragraphs 26 and 27 of his judgment (cited at paragraph 20 above). But I should add that the following considerations compel me to the conclusion that this is a claim that cannot be disposed of simply on the papers and without full investigation at trial. First, there is no satisfactory explanation from the claimant as to why, apparently shortly before the purported advance, the defendant should have chosen to transfer some £48,000 from reputable pension fund holders into the Basdring Pension Scheme if this was not, as the defendant says, part of some wider scheme devised to enable the defendant illicitly to obtain access to monies within his pension pot. Secondly, there is no satisfactory explanation as to why, given the considerable experience and expertise that the claimant had, by 1994, already developed in the field of money lending, and the care which he had taken to devise a system calculated to minimise the risk of successful default on the part of any of his debtors (as explained at paragraphs 10 to 16 of the claimant's first witness statement), the claimant should simply have taken no steps to recover any of the £11,000 that apparently remained outstanding from the defendant between November 1995 and the receipt of the defendant's solicitors letter of 21 June 2006. The suggested explanation (at paragraph 56 of the claimant's first witness statement) that he did not need to recover this loan seems to me to invite cross-examination. Thirdly, if this was a genuine loan arrangement, and appreciated to be such by the defendant, I find it staggering that he should have done nothing to attempt to repay the balance of the loan after November 1995 when interest was running on that balance at the rate of 3% per month on a compound basis. It is equally surprising that the defendant should have caused his solicitors to write to the claimant in the terms of Blacks's letter of 21 June 2006. All of these are matters that cry out for investigation at trial. I acknowledge that the defendant's case is attended with considerable difficulties; and that at trial Mr Freedman's strictures on that case, may prove to be fully justified. But that is a matter for trial, and not for determination at the stage of this appeal.
29. Although it was not cited to me, my conclusion is consistent with, and supported by, the approach of the Court of Appeal (Watkins and Slade LJJ, reversing Webster J) in a pre-CPR case that used to be referred to in the old White Book: see, e.g. para 14/4/9 at p 175 of The Supreme Court Practice 1999. The note reads: "Where there are unexplained features of both the claim and the defence which are disturbing because they bear the appearance of falsity and disreputable business dealings and questionable conduct, the Court should not make tentative assessments of the respective chances of success of the parties or the relative strengths of their good or bad faith, and should not on such an examination grant the defendant conditional leave to defend but should give unconditional leave to defend (Extraktionstechnik Gesellschaft fur Anlagenbau GmbH v Oskar (1984) 128 SJ 417; (1984) LS Gaz 1362, CA)."
30. Given that, in my judgment, this is a case that should go for trial, I consider that it is undesirable for me to strike out any part of the defence unless it is clear that, irrespective of the evidence that may be called at trial, it cannot be sustained as a matter of law. In my judgment, that criterion is satisfied only in relation to one aspect of the defence, namely the plea that the claim is statute barred. The claim was brought on 7 February 2007, just two days short of the 12th anniversary of the earliest date for repayment under the loan agreement. (In any event, by section 29 of the 1980 Act, any right of action to recover the debt is not to be treated as having accrued before the part payment of £5,000 that was effected by the defendant's solicitors on 23 October 1995.) It follows that, by section 8 of the 1980 Act, the claim is not statute barred provided that it is a claim founded on a deed rather than a simple contract. I accept Mr Freedman's submission that this raises an issue of law and of the parties' objective intention, and that what each of the parties may subjectively have thought about it is irrelevant. The legal charge dated 15 November 1994, effectively incorporates the provisions of the loan agreement of the previous day. I am entirely satisfied that the legal charge itself was executed as a deed. Not only was the formality of a deed required in order to create a valid legal charge of the subject property, and not only is the legal charge expressed to be "SIGNED SEALED AND DELIVERED" in the presence of the defendant's solicitor as attesting witness, but clause 10 expressly refers to the legal charge as "this deed". I am therefore entirely satisfied that the claim to recover the alleged debt is not statute barred, and that this ground of defence should be struck out.

Conclusion

31. I therefore conclude that this appeal should be dismissed, save that the plea that this claim is statute-barred should be struck out as disclosing no reasonable ground of defence. On the preliminary issue, I determine that, apart from the possible application of the provisions of section 32 (1) (b) of the 1980 Act, the defendant's claim to reopen the credit agreement as an extortionate credit bargain is statute barred. I invite submissions as to the further conduct of this litigation, and also as to costs.