The lender sought possession but did so late because it had granted a number of indulgences to the borrower and was also delayed owing to an unsuccessful FOS complaint. The court granted the lender an extension of time. The borrowers did not file a defence, only a total of 12 affidavits. The borrowers argued that RHG was not the true lender, merely a go-between between the borrower and the true lender, earning secret commissions, was a ‘pretender lender’ and had not provided valuable consideration. The borrower was in fact a finance broker with RHG at the time of the loan and he says he was not aware that RHG had securitised their loan book and did not pass this information on to his clients or his wife in relation to their joint loan. The borrowers argued that the fact that the lender was advancing monies not from its own funds, but sourced elsewhere, was a matter which should have been disclosed and failure to do so was a fraudulent misrepresentation.
The court unsurprisingly rejected these arguments and held that the loan was made by RHG, the source did not have to be disclosed to the borrower and RHG did provide valuable consideration in the form of the advance. The court said:
The underlying funding source arrangements have no effect on the rights or obligations of the borrowers under the loan and mortgage.
The court rejected the borrowers’ defence that RHG was not the true lender.
The court quickly disposed of the borrowers’ other argument that the lender had breached the loan in failing to respond to its request for documentation by saying:
If the plaintiff was in breach of an obligation to provide documents, that is not a breach which would give rise to an entitlement to terminate the loan agreement. At best, the breach may give rise to an entitlement to seek an order for specific performance, or, for damages if some damage could be demonstrated (which it has not). The defence has no prospects of success.
The court also rejected the argument that the lender was not permitted to enforce the loan because it had received a notice of financial hardship under the National Consumer Credit Code. The court noted that the borrowers did not attempt to seek any change to the loan from the court as a result of the lender failing to respond to their notice detailing their hardship and the lender was entitled to accept cheques from the borrowers as payment on account and this did not preclude the lender from suing on the loan.
The court found the borrowers had no arguable defence and gave judgment for the lender.
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