Wey Bridging Finance Limited v Adam Wayne Marlow & Anor

DAVID STONE (SITTING AS A DEPUTY JUDGE OF THE HIGH COURT):

1. This is my judgment following a trial over three days of this dispute. I am giving my judgment orally now so that the First Defendant, Mr Adam Marlow, who is unrepresented, is able to ask any questions he has about it, and so that we can then proceed to deal with any consequential orders, including costs, without the parties having to return to court at some time in the future.

2. The Claimant, Wey Bridging Finance Limited, is a provider of finance, owned and run by Mr Jordan Hallows. The dispute is in two parts. First, the Claimant claims the repayment of the sum of £1.3 million lent to Mr Marlow, plus costs of £130,932.35 and what is now a substantial amount of interest, £1,146,236.71. That part of the claim is against Mr Marlow personally.

3. The second part of the claim is against the Second Defendant, Leverton Freehold Limited (“LFL”), an entity owned by Mr Marlow. The Claimant claims as assignee to recover £321,000 paid in respect of an option agreement (the “Option”) granted by LFL on 21 December 2017 to Leverton Garden Limited (“LGL”), an entity associated with Mr Hallows, together with interest of £73,791.42.

4. The total claim is therefore for £2,971,960.48.

5. Mr Jack Dillon of counsel appeared for the Claimant. As already mentioned, Mr Marlow appeared for himself – he also appeared for LFL. Procedural history

6. Proceedings were issued on 3 October 2023. A CCMC was heard on 1 August 2024, but then adjourned and relisted for 29 November 2024. Orders were made to prepare the case for trial. This included a date for exchange of witness statements of 23 May 2025. The Claimant filed a witness statement of Mr Hallows, but the Defendants did not file any evidence. Also, relevantly, the CCMC order required the Claimant to file a schedule of loss by 6 June 2025. This was done. The CCMC order provided for any challenge by the Defendants to the schedule of costs to be filed and served by 20 June 2025. This was not done.

7. A pre-trial review was held before Mr David Halpern KC (sitting as a Deputy Judge of the High Court) on 27 November 2025. Relevantly, at this point, the Defendants had not filed any evidence and had not challenged the Claimant’s schedule of loss. I have before me an approved note of Mr Halpern’s judgment, from which it is clear that the Defendants raised with him their desire to file late evidence. Mr Halpern set out in some detail how the Defendants should go about doing that, including seeking relief from sanctions. Indeed, Mr Halpern provided a helpful roadmap for any application for relief from sanctions which the Defendants wished to make in order to enable them to file evidence. However, in the event, the Defendants did not make an application for relief from sanctions and no evidence has been filed.

8. Rather, on 5 January 2026, the Defendants issued an application to adjourn the trial. This was initially on the basis that Mr Marlow was not well enough to attend, including owing to an injured shoulder. Mr Marlow asked that the application be determined on the papers. The Claimant objected to that course and so I listed the adjournment application to be heard on the first day of the trial, Tuesday 20 January 2026. Both sides filed evidence. The Claimant’s evidence included nine videos showing Mr Marlow coaching rugby union that weekend which contradicted his evidence relating to his shoulder. Following the service of the video evidence, Mr Marlow added another ground to the Defendants’ adjournment application: that he was unable to attend owing to fears for his safety following threats made by a third party unrelated to these proceedings.

9. On 20 January 2026, Mr Marlow did not attend court. I determined and rejected the application to adjourn the trial for the reasons I gave at the time and I asked the Claimant’s solicitors and the registry to notify Mr Marlow. This was done. I started the trial, hearing the Claimant’s opening arguments before adjourning mid-afternoon until the Thursday morning, 22 January 2026. This course, suggested by the Claimant, was expressly to give the Defendants one further chance to attend to make their case. Mr Dillon’s opening statement on behalf of the Claimant followed his written skeleton argument, which had been provided to Mr Marlow in advance of the trial, and largely involved taking me through the relevant documents which, again, Mr Marlow had had in advance of the trial.

10. Yesterday, Thursday, 22 January 2026, Mr Marlow attended at court. The Claimant’s witness, Mr Hallows, was affirmed and cross-examined by Mr Marlow, following which Mr Dillon made the Claimant’s closing arguments. At that point, Mr Marlow indicated he was unable, through ill health, to continue and asked for an adjournment until today, which I granted.

11. This morning, Mr Marlow handed up 31 pages of typed closing arguments on behalf of the Defendants. The document includes several headings: i) Economic Duress; ii) £321,100 Option Sums; iii) Flat 1 Lease, Plans and Alleged Breach; iv) The Alleged £1.3 Million Debt; v) Receivers; vi) Removal of the 2017 Legal Charge; and vii) Jordan Hallows’ Witness Statement.

12. Mr Marlow’s written submissions refer to the cross-examination of Mr Hallows, so they had been written, or at least updated, yesterday afternoon or evening, or perhaps this morning. The document is in great detail, with references to authorities and bundle references to the evidence on which the Defendants rely. Mr Marlow said he was not sufficiently well to read his submissions out and so handed them up. Mr Dillon was content to take these as Mr Marlow’s oral closing submissions. He and I both read them and then Mr Dillon made a brief reply.

13. Mr Marlow’s closing submissions include new allegations, and what might be described as evidence. I have not accepted them as evidence, but have dealt with them as closing submissions.

14. I should add that, when Mr Marlow attended court for the first time yesterday, I explained to him that the court would provide appropriate accommodation for his situation. He was able to sit or stand as he pleased and/or to move around the courtroom should he wish to do so. During his cross-examination of Mr Hallows, the court paused on a number of occasions to enable Mr Marlow to rest. I am confident that following his attendance at court Mr Marlow has been able to participate fully in these proceedings. He is obviously an intelligent, articulate businessman with significant experience in business and, it would seem, legal matters. His written advocacy was firmly and well argued. His cross-examination was skilful and at times animated, tending towards combative. His legal documents were professionally presented. Despite his absence of representation and his discomfort, I am confident that Mr Marlow was able to put his best foot forward on his own behalf and on behalf of LFL. Whilst many of the points in his closing written submissions were misconceived, irrelevant or not available to the Defendants on the pleadings, those points were put forcefully, articulately and in great detail.

15. The fairness of the trial was assisted in large part by the professionalism of Mr Dillon and those instructing him. He quite fairly dealt with each of the points raised by Mr Marlow, but also drew my attention to things that might be said on the Defendants’ behalf had they been represented. This was a helpful and economical approach for Mr Dillon and those instructing him to adopt and I am grateful. I have no doubts at all that the Defendants received a fair hearing, despite Mr Marlow’s non-attendance on the first day and his medical issues. Evidence

16. As I have said, Mr Hallows filed a witness statement on behalf of the Claimant. He was cross-examined by Mr Marlow. Whilst Mr Marlow criticised Mr Hallows’ evidence, both whilst cross-examining him and also in his closing submissions, I do not accept those criticisms. I found Mr Hallows to be an entirely straightforward witness, who was doing his best to understand the questions being put to him and to answer them. I accept his evidence. Mr Marlow submitted that Mr Hallows’ evidence had failed to prove a number of matters – including, for example, that the receivers were validly appointed. As I set out below, Mr Hallows was not required to prove that point, or the other points raised by Mr Marlow, so there can be no criticism of Mr Hallows for failing to do so.

17. As I have said, no evidence was filed by the Defendants. During the preliminary stages of the dispute, the Defendants had been represented by solicitors and counsel. This was true at the time of the Defendants’ Amended Defence. Thus, I have the Defendants’ admissions and denials, but no evidence in support of either. I have taken into account that in the Business List pleadings do not stand as evidence. Any matters on which the Defendants wish to rely need to be proved at trial (CPR rule 32.2(1)(a)).

18. There was an issue relating to documents in trial bundle D, which was a supplementary bundle prepared shortly before trial. Attempts had been made to agree bundles A, B and C with Mr Marlow. He declined to engage with that process. As these bundles were served well in advance of trial and Mr Marlow had an opportunity to object to them, I say nothing further about them. Bundle D, however, was only provided to Mr Marlow and to the court shortly before trial and included seven documents which had not previously been disclosed. After I raised this with Mr Dillon, he did not rely on five of them. Of the remaining two, one was an updated Land Registry search and one was a statement of receiver’s fees. These were uncontentious and I allowed Mr Dillow to refer to them.

19. Finally, there was a date in the Amended Particulars of Claim which was obviously wrong. The Defendants quite rightly consented to that being corrected by amendment during the course of the trial. Background

20. The following facts are, as I understand it, uncontroversial. i) Mr Hallows set up the Claimant in July 2015 to provide finance to third parties. ii) Mr Hallows was introduced to Mr Marlow by a friend. According to the Amended Defence, Mr Marlow “works in the property sector”. On 5 October 2016, the Claimant loaned Mr Marlow and his wife, Polly Marlow, £250,000 to refinance existing borrowing in relation to a property on Hersham Road. Further advances were made on 28 November 2016, 15 December 2016, 27 April 2017 and 22 September 2017. iii) This dispute largely concerns a property called Leverton on St George’s Avenue, Weybridge, Surrey, which Mr Marlow had decided in 2015 he wished to develop. The Leverton property then consisted of a large building housing five flats, together with a large rear yard. Mrs Marlow had acquired one of the flats in 2006. Mr Marlow acquired another flat in 2015. LFL bought the freehold to the Leverton property on 26 April 2017 and remains the registered proprietor. Mr Marlow planned to renovate the building and to obtain planning permission to develop the rear yard by building flats on the land. The Claimant loaned LFL monies in relation to the Leverton property. A facility letter dated 18 December 2017 (“the 2017 Facility”) offered a loan facility of £155,000 for a period of three to 14 months. Further advances were made by letters dated 22 January 2018, 2 February 2018, 19 June 2018 and 7 September 2018. On 20 December 2017, LFL charged the Leverton freehold to secure LFL’s obligations under the 2017 Facility. The following day, 21 December 2017, LFL granted the Option to LGL to which I have already referred. The Option was to purchase the yard of the Leverton property for £1.3 million. LGL would pay £14,300 per month for the Option, to be offset against LFL’s monthly interest payments. Variation was agreed on 31 January 2019 and 7 February 2020, extending the period of the Option and increasing the consideration. Mr Marlow was represented throughout this period by experienced solicitors. Planning permission was granted on 8 August 2018 for the development of the yard. The planning permission included, relevantly, a condition that development must be begun within three years. iv) At approximately the same time, there were difficulties with another project at 29 West Palace Gardens. Mr Hallows was seeking to extricate his company Tall Rise Property Ltd from that development by selling its interest to Mr Marlow for £35,000, which Mr Marlow was to borrow from the Claimant. That proposal never came to fruition. v) On 31 January 2019, the Option period was extended by a further year, to 7 February 2020. vi) By March 2019, the Defendants owed the Claimant £2,763,125. This was consolidated in a facility dated 13 March 2019 (“the 2019 Facility”). vii) On 26 September 2019, LFL split the title to Flat 1 of the Leverton property and granted two new leases on two of the flats in the building to Mr Marlow. A new lease on a third flat was granted to Mrs Marlow on 16 January 2020. The two leases granted to Mr Marlow included new rights of way over approximately a quarter of the yard. Mr Hallows’ evidence, on which he was cross-examined, was that a buyer was found for the yard but pulled out once it was discovered that a right of way had been granted over a portion of it. On 7 February 2020, the Option period was extended to 28 April 2020. viii) By a letter of 6 April 2020, LGL’s solicitors notified LFL that the rights of way in the new leases breached the Option and gave notice for the breaches to be rectified. No response was received. LGL then terminated the Option by letter of 27 April 2020. The Option would have, in any event, expired the following day. ix) By 22 May 2020 the outstanding capital under the 2019 Facility had been reduced to £1.3 million. x) LGL assigned its claim against LFL in relation to the Option to the Claimant by an assignment dated 27 May 2020. xi) The Claimant appointed receivers on 4 December 2020. xii) Planning permission for the yard lapsed on 8 August 2021. The 2019 Facility – Mr Marlow’s Pleaded Case

21. I deal first with Mr Marlow’s pleaded case on the 2019 Facility, reminding myself that this part of the claim relates only to Mr Marlow and not to LFL. As will become apparent, Mr Marlow tried to argue in his closing submissions points which were inconsistent with his pleadings. I therefore deal first with the pleaded case, and then with the arguments raised by Mr Marlow in his closing submissions. I should add that Mr Marlow’s cross-examination of Mr Hallows did not address the pleaded issues other than duress, nor did his closing submissions do so in any detail.

22. Turning to the pleadings, the loan amount and the terms of the 2019 Facility are not in dispute. The capital amount of £1.3 million is not in dispute: indeed, it is specifically admitted at paragraph 49 of the Amended Defence which was settled by counsel and signed by Mr Marlow on 23 September 2024. The interest amount is unchallenged. As noted above, the CCMC order provided Mr Marlow with an opportunity to challenge the other expenses, of which he did not avail himself.

23. On the pleadings, four issues arise in relation to the 2019 Facility: i) Lack of consideration; ii) Duress; iii) Unconscionable dealing; and iv) An unfair relationship under the Consumer Credit Act.

24. I deal with each in turn below, but before doing so need to say something about the nature of the relationship between Mr Marlow and the Claimant.

25. Having reviewed all the relevant correspondence that was put before me and had the benefit of observing Mr Marlow and Mr Hallows in court, it is clear to me that their relationship was an ordinary commercial one of well-matched businessmen, each assisted by firms of solicitors. As I have said, Mr Marlow, in his correspondence over the period, has been articulate and sophisticated, fighting his corner to ensure his interests have been protected. Those interests were many – over the relevant period, he had fingers in many development pies. In my judgment, throughout he was well able to assess the opportunities available to him and engaged in arrangements concerning re-financing and security of multiple properties which the casual observer might consider complex or even convoluted. Having watched Mr Marlow spar with Mr Hallows in the witness box during cross-examination, my impression was of a determined individual, skilled at standing up for himself. Consideration The law

26. The law on consideration is well known (see Chitty on Contracts , 36 th edition at 6-015 and 6-017). Consideration is required to make a promise binding. Consideration must have “value in the eye of the law” but its adequacy is not something with which I need to be concerned. Consideration must move from the promisee, but need not move to the promisor. Consideration can include conferring a benefit on a third party. A promise not to sue on a valid claim is normally good consideration. Discussion

27. Mr Marlow’s pleading asserts in paragraph 40.1 of the Amended Defence that consideration was lacking, but does not provide any further explanation or particularisation. As I have said, Mr Marlow filed no evidence. In my judgment, it is clear on the face of the 2019 Facility that there was sufficient consideration for the promise to be binding because (a) the consolidation of the various loans meant that the interest to be paid was reduced; (b) Mrs Marlow and LFL were released from their obligations under previous facilities; and (c) Mr Marlow’s repayment of the capital was delayed, such that he benefitted from the additional time to try and make a success of the Leverton development. Mr Marlow’s pleaded case therefore fails. Duress The law

28. Wilful act duress is described in Chitty on Contracts at 11-011 as “a threat to carry out an action which in itself is lawful but which is coupled with an illegitimate demand which may constitute duress”. Mr Dillon drew my attention to the leading case on duress, Pakistan International Airline Corporation v Times Travel (UK) Limited [2021] UKSC 40 ; [2023] AC 101 , and particularly the judgment of Lord Burrows at paragraphs 78 to 79, with which Lord Hodge agreed: “78. Where it is alleged that one contracting party (the defendant) has induced the other contracting party (the claimant) to enter into the contract between them by duress, the case law has laid down that there are two essential elements that a claimant needs to establish in order to succeed in a claim for rescission of the contract. The first is a threat (or pressure exerted) by the defendant that is illegitimate. The second is that that illegitimate threat (or pressure) caused the claimant to enter into the contract. As Lord Goff said, in the context of economic duress, in Dimskal Shipping Co SA v International Transport Workers’ Federation (The Evia Luck) (No 2) [1992] 2 AC 152 , 165: “[I]t is now accepted that economic pressure may be sufficient to amount to duress [which would entitle a party to avoid a contract] provided at least that the economic pressure may be characterised as illegitimate and has constituted a significant cause inducing the plaintiff to enter into the relevant contract …”

79. It is also important that, in the context of economic duress (but the position appears to be different in respect of other forms of duress: see Astley v Reynolds (1731) 2 Strange 916), there is a third element. This is that the claimant must have had no reasonable alternative to giving in to the threat (or pressure): see, for example, Dyson J in DSND Subsea Ltd (formerly DSND Oceantech Ltd) v Petroleum Geo-Services ASA [2000] BLR 530, para 131; Borrelli v Ting [2010] UKPC 21 ; [2010] Bus LR 1718 , para 35.” Further, Lord Hodge explained at paragraph 2 of his judgment that lawful act duress has developed “by drawing on the rules of equity in relation to undue influence”. The Supreme Court’s judgment in Pakistan International Airline Corporation confirmed that the pursuit of commercial self-interest is justified in commercial bargaining. Lord Hodge held that the scope for lawful act duress in contractual negotiations was “extremely limited” and that it would “therefore be a rare circumstance that a court will find lawful act duress in the context of a commercial negotiation”. Lord Hodge went on to caution that “the boundaries of the doctrine of lawful act duress are not fixed and the court should approach any extension with caution, particularly in the context of contractual negotiations between commercial entities”. Lord Burrows’ preference was for the principles to be developed in a “traditional, incremental way”.

29. Mr Dillon submitted that only two circumstances have given rise to lawful act duress, one being where a defendant uses his or her knowledge of criminal activity to obtain a personal benefit and the other being where he or she deliberately manoeuvres the claimant into a position of vulnerability and thereby forces the claimant to waive a civil claim to which the defendant is exposed. Discussion

30. I can find in the evidence none of the requirements for a finding of lawful act duress. First, there was no illegitimate pressure on Mr Marlow to enter into the 2019 Facility. Whilst duress was pleaded, it was not particularised in the pleading adequately or, indeed, at all. The correspondence that is referred to in the pleading relates to the separate deal relating to 29 West Palace Gardens which, as I have said, never came to fruition. Mr Marlow’s written submissions make clear that he relies on the pressure he says was exerted on him in relation to 29 West Palace Gardens, which tainted the 2019 Facility. He said “the pressure did not need to be repeated in 2019, because submission had already been secured”. I can, however, find no illegitimate pressure in relation to 29 West Palace Gardens. Mr Marlow submits that the various emails relating to refinancing were ultimata, but I can find no evidence that that is the case: Mr Hallows plainly did not intend them as such, and I have no evidence from Mr Marlow that he received them as such.

31. Mr Marlow also sought to rely in his closing submissions on the inaccuracy of the sums claimed as a form of duress. As I have said, that is not open to him on the pleadings.

32. The main threat referred to in the pleadings was the statement alleged to have been made by Mr Hallows that failure to enter into the 2019 Facility would have “serious consequences”. Mr Hallows does not recall making that statement and no evidence has been tendered to the contrary. Mr Hallows has in any event provided his explanation were the statement to have been made, an explanation which I accept. At that point, one of the Claimant’s loans was outstanding and another was shortly due, such that, as Mr Hallows explained, the Claimant had a legitimate basis on which to threaten the “serious consequences” of legal action to recover any outstanding amount. Mr Hallows said in his witness statement “At no time have I or anyone I know associated with the Claimant sought to intimidate Mr Marlow in any way. It was a simply [sic] commercial reality that unless some progress was made or confidence given by Mr Marlow, then enforcement action would need to be taken.” I accept that explanation (which was not disturbed in Mr Marlow’s cross-examination of Mr Hallows). There was, in my judgment, no illegitimate pressure on Mr Marlow at any time.

33. Second, although he denies it, Mr Marlow had other options. He was not through his circumstances forced into the 2019 Facility. I reject Mr Marlow’s submission that the Claimant was acting as a monopolist, applying undue pressure. By way of example only, I accept that Mr Marlow could have sold (or caused to be sold) various properties or he could have accepted a lower offer on the yard. To the extent Mr Marlow was in financial distress, the 2019 Facility was offering him a way out.

34. Third, I can find no causation; none has been pleaded and none has been evidenced. Thus, Mr Marlow fails on the classic statement of duress as set out by Lord Burrows. Mr Dillon cautioned me against extending the notion of duress further to accommodate the facts of this case. Mr Dillon referred me to Lord Hodge’s warning of adopting a cautious approach and Lord Burrows’ of adopting an incremental approach. I accept those warnings. In a case such as this, where both sides are sophisticated business people advised by solicitors engaging in the ordinary refinancing of loans, I cannot see a scintilla of unfair pressure on Mr Marlow. This aspect of Mr Marlow’s pleaded case also fails. Unconscionable dealing The law

35. Unconscionable dealing requires three elements: an oppressive bargain, a weak bargaining position and unconscionability. The first element is that the transaction or bargain must be “not merely hard or improvident but overreaching and oppressive”, one that “shocks the conscience of the court”: see Alec Lobb (Garages) v Total Oil [1983] 1 WLR 87 , a decision of Peter Millett QC (sitting as a Deputy High Court Judge) (as he then was). The second element is that “one party has been at a serious disadvantage to the other, whether through poverty or ignorance or lack of advice or otherwise so that circumstances existed of which unfair advantage could be taken”: Alec Lobb (Garages) v Total Oil . Mr Dillon warned me against interpreting the word “otherwise” widely, relying on the editors of Chitty on Contracts , who say at 11-177: “There is little authority supporting the grant of relief where the claimant’s ‘serious disadvantage’ consists only of the difficult circumstances, including financial, in which he finds himself.” I was reminded that this applies in particular in relation to parties with “commercial experience and sophisticated financial expertise … and ready access to lawyers”: Heritage Travel v Windhorst [2021] EWHC 2380 (Comm) , per Mr Richard Salter QC (sitting as a Deputy High Court Judge).

36. Further, in Pakistan International , a case to which I have already referred, Lord Burrows commented at paragraph 77: “In almost all past English cases on unconscionable bargains, B has been an individual with a mental weakness such as inexperience, confusion because of old age or emotional strain … But it is not inconceivable that the relevant weakness could be the very weak bargaining position of a company …”

37. As to the third element, the Privy Council in Boustany v Piggot (1995) 69 P&CR 298 set out the following, which was adopted in the Court of Appeal in Irvani v Irvani [2000] 1 WLR 412 : “(1) It is not sufficient to attract the jurisdiction of equity to prove that a bargain is hard, unreasonable or foolish; it must be proved to be unconscionable, in the sense that “one of the parties to it has imposed the objectionable terms in a morally reprehensible manner, that is to say, in a way which affects his conscience” … (2) “Unconscionable” relates not merely to the terms of the bargain but to the behaviour of the stronger party, which must be characterised by some moral culpability or impropriety … (3) Unequal bargaining power or objectively unreasonable terms provide no basis for equitable interference in the absence of unconscientious or extortionate abuse of power where exceptionally, and as a matter of common fairness, “it was not right that the strong should be allowed to push the weak to the wall” … (4) A contract cannot be set aside in equity as “an unconscionable bargain” against a party innocent of actual or constructive fraud. Even if the terms of the contract are “unfair” in the sense that they are more favourable to one party than the other (“contractual imbalance”), equity will not provide relief unless the beneficiary is guilty of unconscionable conduct … (5) “In situations of this kind it is necessary for the plaintiff who seeks relief to establish unconscionable conduct, namely that unconscientious advantage has been taken of his disabling condition or circumstances”.” Discussion

38. In my judgment, the 2019 Facility was not an unconscionable bargain. I had before me no evidence that the 2019 Facility was oppressive. There was no evidence that it was out of line with market practice, or overreaching. Mr Marlow has also provided no evidence, as opposed to assertions, that he was in a weak bargaining position. There is also no evidence of Mr Marlow’s allegation that the Claimant “knowingly took advantage of Mr Marlow”.

39. Second, doing the best I can on the evidence which is before me, the 2019 Facility is not, in fact, oppressive. The terms are not uncommercial. They align in many senses with the other facilities which were agreed over time between the various parties involved.

40. Third, as I have said, Mr Marlow is an intelligent, sophisticated businessman. He was advised by solicitors throughout. He was not vulnerable. If he and his companies owed a lot of money at the time, that was as a result of his and their actions. The 2019 Facility enabled him to consolidate the debts owed, whilst releasing Mrs Marlow and LFL.

41. Fourth, I can find no unconscionability in the 2019 Facility. Even ignoring the failure properly to plead what the unconscionability was, I can find none. There is nothing unfair, morally reprehensible or culpable in the bargain. It does not take advantage of Mr Marlow. It does not “shock the conscience of the court”. Unfair relationship The law

42. Reliance is placed on section 140 A of the Consumer Credit Act 1974 inserted by sections 19 to 22 of the Consumer Credit Act 2006 : “ 140A Unfair relationships between creditors and debtors (1) The court may make an order under section 140 B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following — (a) any of the terms of the agreement or of any related agreement; (b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement; (c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement). (2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor). … 140B Powers of court in relation to unfair relationships (9) If, in any such proceedings, the debtor or a surety alleges that the relationship between the creditor and the debtor is unfair to the debtor, it is for the creditor to prove to the contrary.”

43. Mr Dillon referred me to the leading case on unfair relationships, Plevin v Paragon Personal Finance [2014] UKSC 61 ; [2014] 1 WLR 4222 and particularly to the judgment of Lord Sumption at paragraph 10 (emphasis added): “ Section 140 A is deliberately framed in wide terms with very little in the way of guidance about the criteria for its application, such as is to be found in other provisions of the Act conferring discretionary powers on the courts. It is not possible to state a precise or universal test for its application, which must depend on the court’s judgment of all the relevant facts. Some general points may, however, be made. First, what must be unfair is the relationship between the debtor and the creditor . In a case like the present one, where the terms themselves are not intrinsically unfair, this will often be because the relationship is so one-sided as substantially to limit the debtor’s ability to choose. Secondly, although the court is concerned with hardship to the debtor, sub These features may be required in order to protect what the court regards as a legitimate interest of the creditor. section 140 A(2) envisages that matters relating to the creditor or the debtor may also be relevant. There may be features of the transaction which operate harshly against the debtor but it does not necessarily follow that the relationship is unfair. Thirdly, the alleged unfairness must arise from one of the three categories of cause listed at sub-paragraphs (a) to (c). Fourthly, the great majority of relationships between commercial lenders and private borrowers are probably characterised by large differences of financial knowledge and expertise. It is an inherently unequal relationship. But it cannot have been Parliament’s intention that the generality of such relationships should be liable to be reopened for that reason alone. ”

44. Mr Dillon also referred me to Lord Leggatt’s explanation at paragraphs 16 to 18 in Smith v Royal Bank of Scotland [2024] AC 955 : “16. It can be seen that, in dealing with a claim by a debtor under these provisions, the court is required to follow a two-stage process. The first stage is to determine whether the relationship between the creditor and the debtor arising out of the credit agreement is unfair to the debtor because of one or more of the matters specified in section 140 A(1). If the court finds that the relationship is unfair for that reason, the court must then proceed to the second stage and decide what, if any, order to make, selecting from the list of options in section 140 B(1).

17. Some further general points may be made which are apparent on the face of sections 140 A—140C.

18. First, under section 140 A(1) it is not the fairness or otherwise of the credit agreement which the court must determine: it is whether the relationship between the creditor and the debtor arising out of the credit agreement (on its own or taken with any related agreement) is unfair to the debtor.”

45. Mr Dillon also referred me to the survey of the authorities by Hamblen J (as he then was) in Deutsche Bank v Khan [2013] EWHC 482 (Comm) at paragraphs 345 to 346: “345. In considering the test of unfairness guidance is provided by the following authorities in particular: Maple Leaf Macro Volatility Master Fund & Anor v Rouvroy & Or [2009] EWHC 257 (Comm) ; Paragon Mortgages Ltd v McEwan-Peters [2011] EWHC 2491 (Comm) ; and Rahman & Ors v HSBC Bank Plc & Ors [2012] EWHC 11 (Ch) .

346. These authorities suggest that the matters likely to be of relevance include the following: (1) In relation to the fairness of the terms themselves: a. whether the term is commonplace and/or in the nature of the product in question ( Rahma n [277]); b. whether there are sound commercial reasons for the term ( Rahman [278]); c. whether it represents a legitimate and proportionate attempt by the creditor to protect its position ( Maple Leaf [288]); d. to the extent that a term is solely for the benefit of the lender, whether it exists to protect him from a risk which the debtor does not face ( Maple Leaf [289]); e. the scale of the lending and whether it was commercial or quasi-commercial in nature ( Rahman [275]) (a court is likely to be slower to find unfairness in high value lending arrangements between commercial parties than in credit agreements affecting consumers); f. the strength (or otherwise) of the debtors bargaining position ( Rahman [275]); and g. whether the terms have been individually negotiated or are pro forma terms and, if so, whether they have been presented on a “take it or leave it” basis ( Rahman [275]); (2) In relation to the creditor's conduct before and at the time of formation: a. whether the creditor applied any pressure on the borrowers to execute the agreement (if an agreement has been entered into with a sense of urgency it will be relevant to consider to what extent responsibility for this lay with the debtor, as distinct from the creditor) ( Maple Leaf [274]); b. whether the creditor understood and had reasonable grounds to believe that the borrower had experience of the relevant arrangements and had available to him the advice of solicitors ( Maple Leaf [274]); c. whether the creditor had any reason to think that the debtor had not read or understood the terms ( Maple Leaf [274]); and d. whether the debtor demurred at the time of formation over the terms he now suggests are unfair (this point has particular force if he did complain over other terms) ( Maple Leaf [274]; Rahman [276]). (3) In relation to the creditor’s conduct following formation and leading up to enforcement: a. whether any demand was prompted by an “improper motive” or was the consequence of an “arbitrary decision” ( Paragon Mortgages [54(b)]); b. whether the creditor has shown patience and, before leaping to enforcement, has taken steps in the hope of reaching some form of accommodation (for example by attending meetings, engaging in correspondence and/or inviting proposals) ( Rahman [280-281]); and c. whether the debtor has resisted attempts at accommodation by raising unfounded claims against the creditor ( Rahman [280-281]).”

46. Mr Dillon reminded me that the court has grappled with how to apply what is described as the reverse burden of proof under section 140 B(9). He referred me generally to Chitty on Contracts at paragraph 42-239. In Carey v HSBC [2009] EWHC 3417 (QB) , HHJ Waksman QC (as he then was) held at paragraphs 193 to 194 that an allegation of unfair relationship without supporting facts was “not sufficient, without more, to found such a relationship”. A similar approach was taken by Freedman J in Credit Capital v Watson [2021] EWHC 466 (QB) , citing Chitty on Contracts that “if the debtor’s evidence provides no suggestion that the relationship is unfair, ‘the court is likely to regard the creditor as having discharged the burden and to dismiss the debtor’s claim’”. HHJ Hodge (sitting as a Judge of the High Court) in Campbell v Tyrrell [2022] EWHC 423 (Ch) held at [90] that the overriding objective requires a debtor alleging unfairness “to identify those particular facts and matters which the creditor is required to address when establishing the fairness of their relationship”. A similar approach was taken by Mr Paul Stanley KC (sitting as a Deputy High Court Judge) in Gomes v Bowdery (unreported, [2023] 6 WLUK 462), by HHJ David Cooke (sitting as a Judge of the High Court) in Promontoria (Henrico) Ltd v Samra [2019] EWHC 2327 (Ch) and by Soole J in Goldhill Finance Ltd v Smyth [2023] EWHC 362 (KB). Lord Leggatt in Smith v Royal Bank of Scotland , to which I have already referred, held at para 40 that the reverse burden of proof “does not, however, mean that the claimant is absolved from pleading particulars of claim which identify concisely the facts on which the claimant relies” and approved HHJ David Cooke’s statement in Promontoria “it is still the debtor who has the onus of proving facts on which he or she positively relies”.

47. The outlying comment is one of Peter Smith J in Bevin v Datum Finance Ltd [2011] EWHC 3542 (Ch) which is obiter on an interim application to set aside a statutory demand. Peter Smith J did not have the benefit of Carey being cited to him. Peter Smith J held that the debtor did not bear an evidential burden. This comment is inconsistent with the other decisions to which I have referred. I prefer the reasoning and conclusions in those other decisions. Discussion

48. In my judgment, the relationship between the Claimant and Mr Marlow arising from the 2019 Facility was not unfair for the purposes of section 140 A or at all. In my judgment, Mr Marlow fails on the basis of his pleading. Paragraph 41 of the Amended Defence pleads that the 2019 Facility “was the product of an unfair relationship for the reasons in section E above”. This is not the correct test. Under the statute, the unfair relationship needs to arise out of the agreement, not the other way around. I have reviewed section E of the Amended Defence carefully. It does not describe or demonstrate any unfairness. Therefore, Mr Marlow’s case under this heading also fails. Mr Marlow’s case also fails for failing to evidence any unfairness.

49. Having reviewed the authorities cited to me by Mr Dillon, other than the obiter discussion by Peter Smith J in Bevin v Datum , the other authorities require something more than a mere allegation. Each requires some evidence to suggest that the relationship is unfair. Here, Mr Marlow has filed no evidence so his case under this heading must also fail.

50. Finally, if I am wrong in that, the 2019 Facility was, in my judgment, entirely fair to Mr Marlow for the reasons I have already set out above.

51. I therefore reject the four issues raised by Mr Marlow on his pleaded case. The 2019 Facility – Mr Marlow’s Unpleaded Case

52. For the benefit of Mr Marlow, I need to say something briefly about pleaded cases. The court’s rules require a claimant to set out its claims – in this case, this was done in the Particulars of Claim (which were then amended). Defendants have an opportunity to file a Defence: this usually refers to the Particulars of Claim and says, in relation to each paragraph, whether it is admitted, denied, or “not admitted”. Where an allegation is admitted, the claimant does not need to prove it. The claimant does need to prove any allegations which are denied or “not admitted”. Following a Defence, a claimant has the option to file a Reply, setting out the claimant’s response to the Defence. In short, the pleadings set out the issues that the parties will need to evidence, and the issues that the court will need to decide. In many cases, those issues narrow as the case approaches trial, and sometimes at the trial itself.

53. Parties are held to their pleaded case. This is to ensure that the parties know what they need to prepare for trial, and so that the court knows the issues it has to decide. In short, having gone through the process of full pleadings, in this case assisted by solicitors and counsel, a party cannot attend at court and, on the last day of the trial, raise a significant number of new issues that it wants the court to decide.

54. In this case, Mr Marlow’s closing submissions made a significant number of unpleaded allegations concerning the 2019 Facility. Some of these had been telegraphed in the questions Mr Marlow asked Mr Hallows in cross-examination. Most if not all of the allegations appeared to go to the question of duress. Mr Marlow’s unpleaded allegations are set out below in italics, with my comments following each: i) The Claimant had failed to provide any bank statements or accountancy records showing the monies paid under the various facilities. As I have mentioned above, the capital sum owed is not contested on the pleadings and I accept it. ii) The amounts lent in facilities prior to the 2019 Facility were not all loaned at the same time. As I have already set out, various amounts were provided under various updates to the various facilities. This allegation is irrelevant to assessment of the 2019 Facility. iii) Mr Marlow was unable to borrow from anyone else because of contractual obligations . I have before me no evidence at all of this allegation, which was raised for the first time in Mr Marlow’s closing submissions. iv) Loans prior to the 2019 Facility were to LFL, not to Mr Marlow personally. Again, this is irrelevant. In any event, the 2019 Facility changed all that by releasing LFL and making Mr Marlow personally liable. v) There was duress in relation to the 29 West Palace Gardens facility and that this tainted the 2019 Facility. I do not consider this to be true as a question of fact (that is, I do not consider that there was any duress in relation to the 29 West Palace Gardens facility) but it is, in any event, unpleaded and irrelevant. vi) After 2018 there was no signed agreement for a further £500,000 that was loaned. This facility did not proceed and is not part of the Claimant’s case. It is therefore irrelevant to the issues before the court. vii) The 2019 Facility does not show that the various monies were paid. Mr Dillon reminded me that it did not need to: indeed, it would be unusual for a facility agreement itself to be the evidence that the money was paid. Again Mr Marlow has not contested the quantum in issue, despite having had an opportunity to do so. I am in any event confident that the monies were paid. It therefore does not matter, as Mr Marlow alleges, that “the Court is not being shown a calculation; the Court is not being shown a reconciliation; the Court is not being shown a money trail”. As the amount owed was not contested, there is no obligation on the Claimant to prove it in that way. viii) The receivers were not properly appointed. This is entirely irrelevant to the 2019 Facility. Mr Marlow asked me to discharge the receivers – this is not something the court will entertain without a proper application to that effect, properly evidenced. Raising this issue in closing submissions is not appropriate. ix) Whether the charge on the Leverton property was partially released. Again, this is entirely irrelevant to the issues before me, was not pleaded and was not evidenced. Mr Marlow asked me to remove the charge – again, this is not something the court will entertain without a proper application to that effect. x) Whether the paying off of one of the 2017 facilities should have led to the release of the charge. Again, this was not pleaded, was not evidenced and is, in any event, irrelevant.

55. I therefore reject all of these unpleaded allegations for being unpleaded. I also reject them for the absence of evidence and, finally, I reject each of them as being either irrelevant to the current proceedings and/or untrue.

56. Therefore, the Claimant succeeds in total in its case against Mr Marlow. The Option

57. I have already set out above the background to the Option. The Claimant’s case in relation to the Option relates to the Second Defendant, LFL. Where I refer in what follows to Mr Marlow, it is because he was making submissions on behalf of LFL. I have kept well in mind that this part of the Claimant’s case is against LFL, not Mr Marlow personally.

58. The Claimant claims as assignee under an assignment dated 27 May 2020. The Claimants case is follows: i) Clause 6.1 of the Option provided: The Owner undertakes that during the Option Period it will not grant any charge, easement, right, licence, tenancy or other encumbrance affecting the Property without the Buyer’s consent. The Claimant says that LFL breached clause 6.1 of the Option by granting on 26 September 2019 the two new leases on flats within the building. The two new leases included a right of way over part of the yard. ii) The leases both prevented the yard from being developed. Doing the best I can from the plans, the right of way affected approximately a quarter of the usable development land in the yard, leaving aside the strip along the side of the property to provide driveway access to the rear of the property. The impact of the right of way was that it would not have been possible for the developer to build anything on that space, other than driveway, without compromising the rights of way granted. Thus, it would not have been possible to put parking or landscaping or buildings on that part of the yard. This, Mr Dillon submitted, significantly compromised the development, making it financially unviable. iii) The leases were granted without consent. LFL pleaded that it had the Claimant’s consent as lender, but, as Mr Dillon submitted, the Claimant at that time was not the beneficiary of the Option, so its consent was irrelevant. iv) The granting of the leases was a substantial breach within the meaning of clause 19.2 of the Option. Mr Dillon said that the rights of way blighted the development. v) LGL gave LFL notice to rectify by letter of 6 April 2020. Mr Marlow contested some elements of the notice, to which I return below. vi) Rectification did not occur and was, in any event, likely impossible, as it would have required the consent of the new lender who had charged Flat 1 as security. vii) LGL was therefore entitled to terminate and did so on 27 April 2020. viii) LFL was therefore obliged to repay the amount with immediate effect.

59. LFL’s pleaded case was set out in the Amended Defence, which was described by Mr Dillon as having been carefully, indeed coyly, pleaded by counsel. Mr Dillon highlighted that the Amended Defence does not actually deny LGL’s right to terminate the Option.

60. In any event, Mr Dillon submitted that the court should answer the following questions: i) Is the Claimant entitled to claim as LGL’s assignee?; ii) Did LFL commit a “substantial breach” of clause 6.1?; iii) Did LGL give proper notice to LFL to rectify?: iv) Did LFL fail to rectify?; and v) Did LGL properly terminate the Option?

61. As I have said before, the Defendants did not file any evidence. LFL’s Amended Defence remained a series of bare denials by the time of the trial, unsupported by any evidence. I should add that each of the denials in the Amended Defence was addressed in the Amended Reply, so LFL knew the Claimant’s position well ahead of the deadline for evidence to be filed, and certainly well ahead of the trial. Discussion

62. I deal with each in turn: i) Is the Claimant entitled to claim as LGL’s assignee? : I can find nothing improper in the assignment of LGL’s claim to the Claimant. I accept Mr Dillon’s submission that the pleaded point – that the claim is expressed as a debt – is a bad one. The assignment, in my judgment, clearly covers LGL’s claim against LFL, however it is described. ii) Did LFL commit a “substantial breach” of clause 6.1? : in my judgment, the granting of the rights of way over approximately a quarter of the yard was clearly a substantial breach of clause 6.1. Clause 6.1 provides that no rights shall be granted over the property – so clearly this was a breach. And given the impact on the development of the yard, it was, in my judgment, clearly a substantial breach. The developers of the yard would be unable to construct anything over the area of the right of way, except perhaps paving – given the leases allowed vehicular access. Mr Hallow’s evidence was that this severely compromised the development of the yard. I have no hesitation in holding that it was a substantial breach of the Option; iii) Did LGL give proper notice to LFL to rectify? : LFL’s point here is that the notice to rectify did not include the words “substantial breach”. I accept that submission as far as it goes, but it does not assist LFL. There is no requirement in the Option that the notice of breach needed to use any particular language. In any event, the notice of termination did reference the “substantial breach”. iv) Did LFL fail to rectify : There is no evidence before me of any attempt to rectify, and Mr Marlow referred to none in his closing submissions. LFL never responded to the notice to rectify. v) Did LGL properly terminate the Option? : This point arises because the wrong date was set out in the Amended Particulars of Claim. The Amended Defence denies that the Option was terminated on 22 May 2020. Again, that is correct as far as it goes. But the Option was validly terminated on 27 April 2020. As I have already said, there was no denial of the right to terminate. Further, in his closing submissions, Mr Marlow argued that the notice of termination does not include the words “substantial breach”. However, it does.

63. Therefore, in my judgment, the Claimant succeeds on its pleaded case.

64. There were also some unpleaded points which Mr Marlow raised in his cross-examination of Mr Hallows and in his closing submissions which I deal with briefly below: i) Mr Marlow raised again the lack of bank statements. In relation to the Option, this is unsurprising, as the fee was offset against the interest owed to the Claimant. I reject the allegation that there was anything improper in the absence of bank statements in the trial bundles – this was not a point which had been pleaded by LFL, and therefore not a point on which evidence needed to be led by the Claimant. ii) Mr Marlow questioned where the Claimant had provided proof that LGL had paid or lost £321,000. Again, this is not to the point. That was the amount that LGL had paid under the Option by offsetting against the interest owed (which LFL admits), which the Claimant says it is entitled to recover for breach. LFL had an opportunity to challenge the sums claimed, and it did not do so. It is far to late to do this in closing submissions. iii) Mr Marlow submitted that the assignment from LGL to the Claimant does not prove the debt. Again, it does not need to. The assignment simply assigns the right to take action. iv) Mr Marlow submitted that the position concerning the amendment to the leases did not emerge unexpectedly, and that the Claimant was never misled. Again, this is not to the point – as I have said already, the Claimant was not the relevant entity at the relevant time.

65. None of these submissions assist Mr Marlow. In my judgment, the Option was validly terminated for the reasons I have set out. I therefore find for the Claimant on its claim against LFL. (This Judgment has been approved by the Judge.) Digital Transcription by Marten Walsh Cherer Ltd 2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Tel No: 020 7067 2900. DX: 410 LDE Email: [email protected] Web: www.martenwalshcherer.com