England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Claim No: HQ08X01090 Royal Courts of Justice Strand, London, WC2A 2LL
		18/12/2008

Mr Justice Blair:

1. This is a claim by the Claimant, Mr Mohamad Khodari, for repayment of the balance of eighteen loans said to have been made to the Defendant, Mr Fahad Al Tamimi, between April and September of 2007. The total loaned was about £1,125,000. Less repayments, and including an additional 10 percent he claims to be entitled to on the money advanced, his claim is for £240,500. Besides putting him to strict proof of the advances, the Defendant disputes the claim to the extra 10 percent. Further, he says that, if advanced, the money is irrecoverable under the provisions of the Consumer Credit Act 1974 and the Financial Services and Market Act 2000 and the Gaming Act 1892. He also counterclaims an account going back to the commencement of the relationship between the parties in 2002 based upon what he says was a fiduciary relationship between them.

The relationship between the parties

2. Both Claimant and Defendant gave evidence at trial, and in the case of the Claimant called other witnesses as well. The facts as I find them are as follows. The Claimant is a banker working on the private client side of his bank's operations. He looks after the accounts of high net worth individuals. He has been in London since 1989. In 1998, he moved to the London branch of Riyadh Bank. Since 2005, he has been with the Sloane Street branch of National Bank of Dubai, where he is an Associate Director. He is clearly well liked and respected by the clients whose accounts he looks after.
3. The Defendant is a well known business man from Saudi Arabia. It was clear from his oral evidence that he has a strong personality. He started life as an engineer with no personal wealth, and through hard work now owns or runs several major businesses, and has become a rich man. He says candidly that he is a compulsive gambler, but adds that he has recently been getting the habit in check. Over the years, he has spent a great deal of money in various London gaming clubs. Les Ambassadeurs Club is opposite the Four Seasons Hotel where the Defendant usually stays when he is in London. It is one of the clubs to which he belongs, and has featured in this case.
4. The parties first met in 2001 when one of the senior managers at Riyadh Bank in London where the Defendant had an account stepped down. His clients, including the Defendant, were passed to the Claimant to look after. When the London branch itself closed, the Claimant helped him open an account at HSBC. Then when the Claimant got the offer to go to work at the National Bank of Dubai in 2005, he recommended the Defendant to move his account there, which he did.
5. The course of dealing that has led to this case began in about December 2002, when the Defendant asked the Claimant to bring a draft to Les Ambassadeurs Club, which he did. Having lost that money on the tables, the Defendant then asked him to lend him some more, and he agreed, using his debit card to obtain £3000 worth of chips for him. This first transaction is also important as because it was repaid with £300 added on, and I shall come back to it later as regards the claim for 10 percent on top of the sums loaned.
6. In any case, a course of dealing was established between them outside the conventional banking relationship of banker and customer. There is a dispute as to what that course of dealing consisted of. The Claimant says that it consisted of him personally lending money to the Defendant for gambling at his request when he needed it, typically out of banking hours, and at short notice. The Defendant says that he would never summon the Claimant at night. He says that he seldom called the Claimant at all asking him for money. Rather, the Claimant was continually hovering around the club almost forcing money on him. He regarded the Claimant as a younger brother, and his main motive in borrowing the money, he said, was to help him out.
7. I prefer the Claimant's evidence on this point. The Defendant is not the kind of man to allow someone to force loans upon him. Further, the Claimant's version of the facts is supported by the evidence of his brother, Mr Rabih Khodari, who the Defendant rightly accepts was a truthful witness. He went with his brother a couple of times late at night to deliver cash to the Defendant outside Les Ambassadeurs Club. On two occasions when his brother was abroad he handed over money himself. The Defendant is much the stronger personality, and doubtless the Claimant was anxious to please an important customer of the bank.
8. I do however accept the Defendant's evidence that for much of the time he spent at the club, he was not gambling at all. He used it as a convenient place for meetings and business entertaining. Indeed, he could hardly have continued to run a successful business had he not done so. But I am satisfied that as time passed, he borrowed substantial and increasing amounts from the Claimant, when for one reason or another he was unable to access his own funds. Until the loans that are the subject of this claim, he would typically repay the money in full, with an added 10 percent, within a day or so.
9. I also accept the Defendant's evidence that from the middle of 2006, he has been succeeding in limiting his gambling activities. Up until June 2006, he told me he had facilities with casinos which would have covered him for up to £2.4 million per night. At that time, he stopped the facilities, to try to get his gambling in check. He thereafter became more dependent upon loans from the Claimant. I think he resented the fact that these loans, albeit made at his own request, resulted in him continuing to gamble.
10. In any case, there is no dispute that over the years the Defendant borrowed very substantial sums from the Claimant. At one time, the Claimant was keeping over £100,000 in cash at home in case money was needed. The Defendant has submitted that this was a float for what amounted to a business of lending to others, but as further explained later in this judgment I am satisfied that it was mainly to accommodate requests from the Defendant himself. Loans for over £50,000 were common. To give some indication, repayments via Les Ambassadeurs Club totalled £556,000 between 7 July and 21 August 2006. This would roughly coincide with the time when the Defendant cancelled his credit facilities with the club, and the Defendant himself says that he borrowed £600,000 probably about this time. To give another example, the traffic cards from the club show repayments by way of bankers' drafts amounting to £2.96 million in the period between December 2005 and October 2006. The Defendant says that over the course of the last six years, the sums involved are in the region of £14 million to £15 million. The Claimant puts the figure at half that. The evidence I have seen suggests that 2006 was the high point, and I think that the Claimant's guess is likely to be closer to the mark.
11. Although I am sure that the Claimant bitterly regrets ever having become involved on this scale, one can see that these loans were very profitable for him. The balance in his account with Abbey National went up from £90,000 at the end of 2003 to £640,000 in March 2007. Of course some of this is referable to his salary, and some to some property deals he told me about, but I am satisfied that a substantial proportion of it comes from the 10 percent charge on his loans to the Defendant. This has also tended to undermine the relationship between the parties, as the Defendant has realised the extent of the profit that has been made at his expense.
12. There are no proper records. The Defendant was never asked to sign anything, not even an informal IOU. The parties worked entirely on trust, and as I have said, repayment plus 10 percent was usually made quite speedily. The reason for the absence of anything approaching a proper record is clear enough. The Claimant did not want either Riyadh Bank or National Bank of Dubai to know about his dealings with this customer on the side. On the other hand, I am satisfied that the informality in their relations suited the Defendant too. Such is his personality, that he would never have done business in this manner if it had not suited him.
13. By March 2007, a position had been reached in which no money was owed, and it appears that the parties were on good terms. The Claimant had kept a running account of sums outstanding, but at this time destroyed such records as he held. He rather qualified that in oral evidence, saying that there had not been a running account as such, and that when periodically the balance between the parties reached zero, he would destroy the records. At any rate, there are none for the period up to March 2007.

The breakdown of the relationship

14. The Claimant says that loans resumed in April, with £480,000 (leaving aside the extra 10 percent claimed) being loaned over two days on 6 and 7 April 2007. The last repayment in the sum of £101,500 was he says made on 8 August 2007, and the last advances in the sum of £35,000 were made on 8 September 2007. Unfortunately, round about this time, the relationship of trust between the parties began completely to break down. A person to mention at this point is Mr Ivan Williams, because rightly or wrongly, he has played a part in the events that have led to this litigation.
15. In the Defendant's words, Mr Williams runs errands for him. These errands included collecting cheques and bankers' drafts from his bank, and delivering them to him at Les Ambassadeurs Club. The Claimant and Mr Williams are now also in dispute. He has alleged that the Claimant owes him commission, an allegation which is denied. The Defendant says that Mr Williams told him that the Claimant had agreed to pay him a quarter of the 5 percent profit element he had agreed to pay the Claimant. He says it did not trouble him as it had no financial effect on him. His main concern he says arose when Mr Williams told him that he had seen the Claimant depositing bankers' drafts drawn on the Defendant's own bank. Since the point of the loans was that the Defendant could not access his money at the time he needed it, he says that he confronted the Claimant about this. He maintained that he had borrowed the money from someone else.
16. The event Mr Williams reported to the Defendant may have been the loan by the Claimant of £100,000 on 9 June 2007, which was made by way of a bankers' draft deposited with Les Ambassadeurs Club. If it was, then the instrument was drawn on his account at Abbey National, not on the Defendant's account at National Bank of Dubai. Mr Mendoza submits that this was a case of Mr Williams stirring up trouble.
17. Be that as it may, the £480,000 borrowed at the beginning of April was not repaid immediately. The next repayment was not made until 9 May 2007, when only £73,500 was repaid. The Claimant says, and I accept, that he tried to speak to the Defendant, and got through by phone to him in Saudi Arabia, but he hung up. The stress seriously affected his health, and he was hospitalised in mid-May with pneumonia and clots on his lung.
18. The loans and partial repayments continued sporadically up to the beginning of September. The Claimant sent some emails to the Defendant, and also asked Dr Tarek Shawaf (who the Defendant described as his boss) to help. The Defendant said that he was most upset by these approaches. The emails appear on their face innocuous, and I accept that the Claimant did not intend to embarrass the Defendant by them, or by the various other attempts he made subsequently to get repaid. But I also accept that his gambling activity was a sensitive subject so far as the Defendant was concerned, and that his anger at what he saw as unjustified pressure on him, though objectively misplaced, was genuine.
19. It prompted him to send an undated letter to the Claimant sometime in October 2007. He says it was drafted by an American lawyer in Saudi Arabia with input from a Mr Bakhsh, a business consultant who had been sending demands for payment on behalf of Mr Williams to the Claimant at round about the same time. It bears the Defendant's name, but not his signature, and the impression he gave in his oral evidence was that he was not very familiar with it. It begins, "By looking at my records, I have now discovered that I may have been overcharged unfairly …". In his evidence, the Defendant was not able satisfactorily to explain what these "records" consisted of. The letter asks for an account of the transactions between them over the past six years. But he must have realised that this would be well nigh impossible given the informal way the transactions had been entered into.
20. Around the beginning of November 2007, the King of Saudi Arabia paid a State Visit to the United Kingdom, and the Defendant says that he got a call at this time from someone in the Royal Court enquiring on the Claimant's behalf. This made him very angry, but the parties nevertheless met on 1 November 2007 to try to resolve their difficulties, though the outcome was inconclusive.

Attempts at settlement

21. There followed an informal attempt at settlement by Mr Nasser Reed who is the London solicitor who at the time was acting for the Claimant. Mr Reed gave oral evidence, and though the Defendant's closing submissions describe him as an "agitated witness", broadly I accept his evidence. There were two meetings with the Defendant at the Four Seasons, the first being to discuss Mr Williams' claim. At the second, there was a discussion (not without prejudice) as to what was owed to the Claimant, and Mr Reed says that the Defendant stated quite openly that he owed £240,500.
22. Whilst I have accepted Mr Reed's evidence, I have to keep in mind that he has been the Claimant's solicitor, and is not a neutral party. However I also heard from Mr Mahmud Al Gurayed who told me that he is a friend of both parties. He was a senior Saudi diplomat in London for 12 years, and is now serving in Dubai. Although the Defendant's closing submissions describe him as a "less reliable witness", I am satisfied that he is a neutral party who has become involved only so as to try to avoid any embarrassment that has been caused by this case coming to trial, and I accept his evidence.
23. He said that he had been told by the Claimant that a substantial sum was due, but he did not know the details of the exact sums. He met the Defendant by chance in Riyadh in January 2008 and had lunch with him. He mentioned to the Defendant that he understood that there were issues between him and the Claimant, and without any prompting, the Defendant said that he owed the Claimant £240,000 (which is the amount claimed less £500). He proposed to pay this by means of £200,000 to him, and £40,000 to "a Mr William" (obviously a reference to Ivan Williams). He said that he proposed to do this within a week to ten days.
24. In cross examination, Mr Al Gurayed denied that it was he who had mentioned £240,000. He also denied saying that the Claimant was "an imbecile who had been pestering him". He did however accept that the Defendant was very upset that (as he saw it) the Claimant had been talking to everybody, and that he understood that the Defendant wanted a letter of apology. The Claimant told me that when he heard about this conversation from Mr Al Gurayed, he was greatly relieved that the matter appeared to have been concluded. However, no money was forthcoming from the Defendant, though in February 2008, a draft letter of apology was produced by his lawyers. But a settlement was not concluded, and these proceedings were begun in March 2008.

The loans the subject of the claim

25. For the March to September 2007 period in respect of which he claims, his records consist of two sheets of paper showing in manuscript the loans and repayments he says were made. These are extrapolated in the schedule attached to the Claimant's Particulars of Claim (subject to some minor corrections made by counsel in opening). A further schedule has been prepared for the closing. I have not been given totals by the Claimant, but the arithmetic is not in itself in issue. Over the period in question, there are said to have been eighteen loans in all totalling well over £1 million, and ten repayments, leaving a balance of £240,500. Some of the loans and repayments were made the same day. The balance claimed includes the extra 10 percent, except in relation to loan 7, as to which the Claimant says he did not charge interest because the Defendant made a big repayment of £250,000 the following day.
26. The Defendant does not say that the loans were not made. He says that he cannot recall them, and his defence puts the Claimant to strict proof. There are factual inaccuracies in his witness statement, where he says that the Claimant was not at the casino in question on the day when the advances were made. The casino records (though these as the evidence has shown are not infallible) suggest that this is wrong, and that both parties were in the casino on the day of the loans. He has also had to retract certain statements that he was absent from the casino on some of the days when repayments were said to have been made (though this is less significant because there was no necessary reason for the dates to coincide, depending on how repayment was effected).
27. The Claimant was extensively cross examined on the details of the loans and repayments. In closing, Mr Jonathan Russen, who has conducted the Defendant's case with great skill and tenacity, restricted his specific submissions to loans 1, 10, 14 and 16 in respect of which he submitted that the Claimant had not established on the balance of probabilities that they were made for the benefit of the Defendant. In the case of loan 1, his challenge is restricted to the part of the loan that was made by bank draft, namely £141,000 (the balance of £109,000 having been made in cash). As regards these loans, he submits that although copies of instruments made out to Les Ambassadeurs Club have been disclosed, there is no satisfactory evidence of the proceeds being credited to any casino membership account. The total of what he calls these "unproven cheque payments" is £361,000 which is somewhat less that a third of the total said to have been advanced.
28. To prove the case, and in the absence of proper records, I had to be laboriously taken to a variety of bank statements, casino records and other material and match it to the transactions noted on the Claimant's manuscript record. That exercise having been done, and in the light of the Claimant's evidence, I am satisfied as to the accuracy of his manuscript record. It is correct that, as Mr Russen has submitted, it is not possible in all cases to demonstrate clearly the destination of the funds. But I am satisfied that the Claimant was telling me the truth when he said that the money identified in Mr Russen's challenge was loaned to the Defendant, and not to any third party. He told me, and I accept, that he is not a gambler himself, and that possibility can also be ruled out. Further, I have already found that the Defendant told both Mr Reed and Mr Al Gurayed that he owed the Claimant £240,500 (the number given to the latter was in fact £240,000), and that to my mind resolves any remaining doubt that there may be.
29. Finally, there is the Defendant's own evidence. Whilst I can accept that he is a man used to dealing in large sums, I do not find it credible that he cannot recall any of these loans. There would be no reason otherwise to have made the large repayments that he made. Significantly, in his oral evidence, he stood by his witness statement saying that, "I believe that the frequency of the alleged advances and the sizes on the schedule attached to the Claimant's claim are not dissimilar to the advances made throughout the vast majority of our relationship". That came close to an admission, and though he did not say so in so many words, the clear implication of his evidence was that he took issue not with the amounts said to have been loaned and repaid over this period, but to the ten percent which the Claimant charged on top.
30. I am satisfied that a balance of £240,500 is owing subject to the Defendant's other defences.

Misrepresentation and the claim for 10 percent

31. The Claimant submits that each transaction was a separate self-contained loan agreement which, by virtue of the course of dealing between the parties, carried with it an implied term that repayment would be made with an additional 10 percent. It is submitted that the Defendant agreed to pay 10 percent not because of any representation or even discussion as regards the cost of providing the money (the Claimant says that there was none) but rather because this was the usual rate that would be payable for short term cash injections required for gambling purposes. In this regard, the Claimant relies on the Defendant's own evidence as regards the cost to him of borrowing from money exchanges. He also relies on the evidence of Mr. Sarkis Kouyoumdjian (who owned a number of bureaux de change at the time) and who said that a charge of 10% or even higher on short term loans of this kind was fairly normal. He further relies on the evidence of Mr. David Lazare, but I have not accepted this evidence, because Mr Lazare clearly has or had his own dispute with the Defendant.
32. Nevertheless, it is not in dispute that the Defendant always did repay the Claimant with the addition of 10 percent, and this was done for a considerable period of time, in respect of a considerable number of loans. This explains why the defence is put solely on the basis of misrepresentation. It is submitted that the Defendant was induced to pay the Claimant the additional 10% by the latter's representation that he was incurring 5% in his own borrowing costs, which representation was untrue.
33. So far as the inception of the 10 percent arrangement is concerned, as I have said, in about December 2002 the Defendant asked the Claimant to lend him money, and he agreed, using his debit card to obtain £3000 worth of chips for him at Les Ambassadeurs Club. When he was repaid the money, he got an extra £300. But the circumstances in which the extra money was paid are in dispute. According to the Claimant, the Defendant told him that 10 percent was the commission which he usually paid when borrowing money from other people. He says that the 10 percent was the Defendant's idea, not his.
34. According to the Defendant, what happened was that he had asked for funds to be transferred from the branch, but the Claimant told him that it was too late in the day to issue a bankers' draft. He could arrange to advance the money personally, but it would be at a cost, because he would have to borrow it from a money exchange which would charge him. The Claimant told him that the cost would be 5 percent. He asked if the Defendant minded whether he got an additional 5 percent for his trouble, and the Defendant said that was fine. It still worked out cheaper than if he obtained the money himself from a money exchange using one of his own credit cards (as he had done many times before). This was because of the charges and exchange costs that would be incurred. He says that though he agreed an extra 5 percent, he is absolutely clear that he did not agree an arrangement under which the Claimant would receive a net reward of 10 percent of the sums loaned.
35. I agree with Mr Russen that this issue turns primarily upon a choice between the testimony of the parties. He submits that on the Claimant's case, the 10% appears to have remained very much a voluntary payment by the Defendant, yet it is far more likely that someone who has engaged in regular and substantial lending transactions will have made a representation to justify a profit element. He points to the transaction on 7 April 2007 when the Claimant told the Defendant that his borrowing costs on £60,000 of the £100,000 loaned were going to be 12.5%. Why, he asks, would the Claimant have mentioned this (when a return of 10% on the whole would still have produced a profit) if it did not represent a departure from a previous representation as to his borrowing costs? He submits that although the Claimant represented that he was incurring his own borrowing costs, it is clear that he did not do so unless he was raising the monies through Mr Kouyoumdjian. The fact, it is submitted, that the Defendant looked upon the Claimant "like a brother" and was prepared to help him out by paying the percentage—he could have got the money more cheaply using his own credit card at bureaux de change or even for nothing by keeping open lines of credit at the casinos—does not mean that he did not, and now cannot, rely upon the misrepresentation as to cost.
36. Like much of what happened between the parties, the facts are opaque, partly because there is not much by way of records against which to check their recollections. I am satisfied that both of them sought to tell the Court the truth, but as Mr Russen points out, I have to choose between their accounts. I have some sympathy with the Defendant on this issue because although he is a wealthy man, I have no doubt that he genuinely feels that he has been taken advantage of over the cost of these loans. By taking the extra 10 percent, and claiming it in this action, the Claimant has left himself open to the allegation that he was really conducting a business rather lending to a friend, a point I will have to come back to.
37. But as to the specific misrepresentation on which this issue turns, I prefer the evidence of the Claimant. The Defendant is a businessman, and is well aware of the cost of money. He was also well aware of the means by which the loans were provided. An example is the many debit card transactions that took place over the years. The Claimant says that the very first loan of £3,000 in December 2002 was made in this way by him handing over his card to the cashier at Les Ambassadeurs Club, and it is indeed very likely to have happened this way. As Mr Mendoza submitted, there is no "cost" inherent in such a debit card transaction, of either five or ten percent, and the Defendant's version of events is to that extent implausible. In any case, I find that there was no misrepresentation by the Claimant in this respect, and am satisfied that except on the first loan and on the occasion identified in the Defendant's closing submissions, the charge was simply paid, and the basis not discussed between them.
38. There follow a number of legal defences raised as to the recoverability of the loans. An allegation that the Claimant was carrying on an unauthorised deposit taking business contrary to the Financial Services and Markets Act 2000 was rightly abandoned by the Defendant in closing.

Consumer Credit Act

39. The Defendant argues that the Claimant has been carrying on the business of lending monies to individuals for them to gamble with those monies. The Defendant it is said was the principal, but by no means the sole, client of this business. As a consequence, it is submitted that loans 15 and 18 (each for £5000) are unenforceable by reason of Section 40 (1) of the Consumer Credit Act 1974. These are the only two of the eighteen loans within the s.8 limit of £25,000 beyond which the 1974 Act was inapplicable.
40. The court is concerned with the 1974 Act ("CCA") before its amendment (generally with effect from 6 April 2008) by the Consumer Credit Act 2006. Section 40(1) of the CCA (which is within Part III of the Act) provided as follows:

"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."

Under section 189(1), a "non-commercial agreement" means "a consumer credit agreement or a consumer hire agreement not made by the creditor or owner in the course of a business carried on by him".

41. Whether or not a person is carrying on "a business" depends on a number of factors, including whether there is some degree of regularity in the relevant activity: see Davies v Sumner [1984] 1 WLR 1301, 1305D-G. In Morgan Grenfell & Co Ltd v Welwyn Hatfield DC [1995] 1 All ER 1, 13 (addressing the Financial Services Act 1986) Hobhouse J said that "regularly entering into a certain type of transaction for the purpose of profit is a good indication that the party so doing is doing so by way of business." Section 189(2) of the CCA provides that "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." In R v Roy Marshall (1990) 90 Cr. App. R. 73 the Court of Appeal cited with approval a passage from Goode on Consumer Credit Legislation as follows:

"Hence regularity of activity is necessary before that activity can be regarded as a business activity so as to attract the licensing provisions. Thus a person making occasional bridging loans for his clients or customers would not on that account alone be carrying on a consumer credit business."

But in my view regularity is not the only indicia to take into consideration. For example, frequent lending to a family member is not a business activity merely by reason of its frequency, because the loans are explicable by the familial relationship.

42. In this case, the Defendant relies upon the scale of the lending, pointing to the figures that I have set out in paragraph 10 of this judgment. The case does not rest upon loans made to him only. It is submitted that the evidence shows that the Claimant attended casinos not just to meet other clients of the bank, but to lend money to them. There is a group of transactions in August 2004 totalling £110,000 when the records for each casino show that the Defendant was absent at the material time. However the Claimant says, and I accept, that he has a clear recollection of visiting a series of casinos with the Defendant about that time. Further, there appears to have been a time lapse between the use of the Claimant's debit card at a casino, and the debit in question showing up on his bank statements. I can only place limited reliance on these disputed transactions.
43. There were five other occasions identified by the Defendant from the documents when he was not present at a casino, yet there appears to have been a loan made by the Claimant. These were on 2 September 2003, in March and April 2004, on 4 May 2004, on 7 October 2005 and on 16 March 2006. These dates do not fall within the timeframe of this claim, but the Defendant submits that the explanation for withdrawals at Les Ambassadeurs Club on these dates could be that the Claimant was lending to enable other friends to gamble. Other factors said to point to a business activity include the size of the "float" kept by the Claimant at home, the fact that on occasions he was prepared to borrow from bureaux de change in order to lend on, the fact that on one occasion when his borrowing cost 12 ½ per cent he passed this cost on to the Defendant, his relation with Ivan Williams, and the fact that he was prepared to spend lengthy periods of time at the casino. (In latter regard, I should note a concession very properly made by Mr Russen that casino records do not demonstrate whether someone has left and returned the same day to the premises between the times recorded for his arrival and departure.)
44. The facts of this case seem a long way from consumer lending, but none of the factors relied on by the Defendant appear to me to be particularly to be convincing, and as against them, I have the evidence of the Claimant. He did admit that he had lent money to Mr Khalifa Abdulla and Mr Fouad Al Zayat but said, and I accept, that these loans were rare and that almost all the loans he made over this period of some six years were made to the Defendant. These loans resulted from his desire as a banker to foster the relationship with an important client. Other such relationships took him frequently to casinos, but not in my view to make loans. Whilst there was undoubtedly considerable regularity in his lending to the Defendant, I am satisfied that he was not thereby carrying on a money lending business.
45. Separately from the point taken on s. 40, the Defendant relies on provisions in the CCA (the old "extortionate credit" test and the new "unfair relationships" test) which enable the Court to re-open a credit bargain. On the basis that the advances referred to in the Schedule to the Particulars of Claim were "new" agreements (rather than part of an existing agreement) which post-date 6 April 2007, it is the new provisions that apply. The Defendant's case is that a claim to a 10% return on lending which might be outstanding only for a matter of days in circumstances where he was led to believe that half of that return would be used to meet the Claimant's own borrowing costs is manifestly unfair: see sections 140A(1)(a) and (c). If the Court agrees, then it has power to "reduce or discharge" the profit element claimed.
46. I do not accept this submission. I have already held that the Defendant was not led to believe that 5 per cent was attributable to the Claimants' own borrowing costs when dealing with the misrepresentation allegation. The size of the charge is plainly very large compared to the short period of the loan, but this has to be seen in the light of the credit risk assumed in making the loan, as this litigation shows very clearly. The Defendant wanted these loans, and could well afford to repay them. There was nothing unfair to him in the relationship between the parties which would justify invoking section 140A.

Gaming Act 1892

47. Finally, Mr Russen submits that the loans are null and void by reason of s. 1 Gaming Act 1892. Section 1 was repealed by s. 334 of the Gambling Act 2005 with effect from 1 September 2007, so that this point does not affect the last two loans totalling £35,000. As put in closing, the case is that the Claimant is suing upon a promise by the Defendant to pay the Claimant a "sum of money paid by him [the Defendant] under or in respect of a contract of agreement rendered null and void by the Gaming Act 1845". This is submitted to arise because the Claimant "made deposits (of cash or by use of debit card or cheque) to obtain gaming chips for [the Defendant]". Mr Russen relies on the words "in respect of". Further, it is submitted that the 10% charge was a "sum of money by way of commission, fee, reward, or otherwise in respect of any such contract" within s. 1 Gaming Act 1892. The two points go together.
48. In Tatam v Reeve [1893] 1 QB 44, which must have been one of, if not the, first case on the 1892 Act, Lord Coleridge CJ said that, "If one man chooses to trust another in matter which are called matters of honour, he must do so at his own risk and with full knowledge that he must suffer, if the person whom he has trusted chooses to repudiate what is called it called his debt of honour". But this was a case involving the discharge of existing gambling debts, which is not as I understand it the factual scenario relied on in the present case.
49. Further, subsequent cases placed a gloss on the words of the statute. Mr Russen accepts the accuracy of the test as adumbrated by Denning LJ in MacDonald v Green [1951] 1 KB 594, 605-6:

"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".

It is to be noted that the word "is" is italicised in the judgment of Denning LJ.

50. 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. (I should note that the Defendant himself in his oral evidence would only go so far as to say that at times he had seen the Claimant using a debit card in the club).
51. The Claimant's case is that though the resulting loans were plainly made on the basis that they would be used for gambling, they were not "hampered by a stipulation that the money is to be used for payment of a betting debt". I have not found this issue an easy one to resolve. But on balance, and applying the test in MacDonald v Green, I have concluded that these loans were hampered by no such stipulation. Mr Mendoza submitted that this was a relationship in which the Claimant did what he was told. Having observed each of them give evidence over a period of some days, I think that this is an entirely accurate characterisation. I am satisfied that the Claimant attached no stipulation express or implied to the loans he was making to the Defendant. There was at least one occasion when the Defendant gave a substantial quantity of cash to one of his children from money loaned by the Claimant. But there could have been any number of such occassions, had the whim taken him. In the event, the conclusion I have come to is that these loans were not invalidated by the 1892 Act. This conclusion equally applies to the 10 percent charge.

Fiduciary relationship

52. The Defendant's final point is that the Claimant was his fiduciary and is accountable as such. He should therefore, it is submitted, provide a full account of the loan transactions going back to 2002.
53. In a well known passage in Bristol & West Building Society v Mothew [1998] Ch 1 at 18, Millett LJ said:

"A fiduciary is someone who has undertaken to act for on or behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. The core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. As Dr Finn pointed out in his classic work Fiduciary Obligations (1977), p. 2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary."

54. In this case, the fiduciary relationship is said to arise from the following. The Claimant was the Defendant's banker who he trusted. Whether or not the first £3,000 loan was at the request of the Defendant, the Claimant was content to see the relationship extend (without letting his employer know about it) to a private relationship of lender and borrower. It is submitted that his ability, acting on oral instructions, to issue bankers' drafts at National Bank of Dubai formed an important part of this private relationship, giving him a unique degree of control over the Defendant's bank account. Some of the loans were repaid by being credited to the Claimant's own casino account. It is the Claimant (it is submitted) who, putting it at it lowest, has used his position at the bank to facilitate the operation of the private lending arrangement. The fact that banker's drafts have been credited to the Claimant's casino account when the Defendant says he has not approved of the practice (or been present to countersign the draft) justifies the conclusion that the Claimant is accountable as a fiduciary.
55. As Mothew shows, the essence of a fiduciary relationship is that the relations between the parties are such that one on them has to subordinate his own interests to those of the other. A "relationship of trust and confidence" is a term often used in this context. The relations between the Claimant and the Defendant were certainly based on trust and confidence. Indeed, they were entirely based on trust and confidence — but it was mutual. As I have said, the Claimant did not get the Defendant's signature on a single scrap of paper for any of the many loans made over the six year period during which they were made. He trusted the Defendant to repay him, and until the parties fell out, repayment was duly made. On his side, the Defendant trusted the Claimant to tell him correctly what was owed, and while the relationship lasted, never asked for a record of the loans. In October 2007, after it had broken down, he did ask for an account of the transactions between them over the past six years. But as I have said earlier, he must have realised that it would be well nigh impossible to go back that far given the informal way the transactions had been entered into. I am satisfied that the obligations identified by Millett LJ in Mothew did not arise, or result in a fiduciary relationship, in this case, and that the claim for an account on this basis must fail.
56. In view of the submissions made as to the degree of control that the Claimant had over the Defendant's bank account, I should make it clear that there has been no suggestion in this case that the Claimant ever caused any dishonest debits to be made the Defendant's bank accounts. That would have given rise to a cause of action regardless of any fiduciary relationship, but as I say, it does not arise.

Conclusion

57. In the absence of proper records, the Defendant has required the case against him to be proved, and in my view it has been proved. The Claimant is entitled to judgment as claimed. I am grateful to both parties for their assistance.