An elderly woman has appealed in court against bridging lender Capital Bridging, after being found to have participated in deceiving the lender when taking out a loan facility.

Mrs Bernice Wood of 4 Hardwicke Road, Beeston, who was 75 years old at the time of the facility, obtained a £64,000 bridging loan from Capital Bridging Finance Limited for a period of six months after signing a declaration in the required form that the purpose of the borrowing was business use. Mrs Wood also maintained that she was not in occupation of the security.

In fact, the purpose of the loan was to fund a business, not for her, but for Mrs Wood’s son-in-law, Mark Johnson. It was submitted at Court that he persuaded Mrs Wood to apply for a business bridging loan from Capital Bridging, in her name, using her home as security.

At the time, Capital Bridging was not regulated for such lending.

The lender was duped into believing that Mrs Wood was not living at the Beeston property she offered as security on the loan, when in fact she was.

The Court accepted that at her son-in-law’s instigation, Mrs Wood dishonestly participated in deceiving the lender, by stating that she lived somewhere other than the property used as security. Mrs Wood even went to the lengths of providing her solicitors with a doctored version of a bank statement, with a false residential address, which was then forwarded to the lender, as evidence of her non-occupation.

“By this fraud, the claimant was indeed deceived,” Lord Justice Briggs commented.

The business declaration which was signed by Mrs Wood stated: “I am entering this agreement wholly or predominantly for the purposes of a business carried on by me or intended to be carried on by me.”

While there was indeed a business purpose, and the judge in a previous trial had decided in Capital’s favour, at appeal, however, when the regulated aspects became the predominant issue, the appeal court gave more weight to the fact that the lender had been informed of what the borrower was up to before the loan was completed, than to the fact that the borrower had misrepresented her position in her declarations. In the Court’s view the lender had not been misled.

“…Neither she, her son-in-law nor the broker acting on her behalf, a Mr Esqulant, made any secret of her real purpose,” Justice Briggs noted, adding that Mr Esqulant told the lender that the loan was for the purpose of assisting a family member, by email.

“…The claimant was not misled, still less deceived, by it,” Lord Justice Briggs commented in the most recent hearing.

After grant of the loan, Mrs Wood’s son-in-law failed to repay her in time, and then left for North Cyrpus, leaving her to “face the music” when the lender sought repayment.

In August 2012, Capital Bridging issued mortgage possession proceedings, on the basis that the loan agreement was not a regulated consumer credit agreement.

Mrs Wood denied that she borrowed anything from Capital Bridging or had signed any of the relevant documents, other than as a witness. She also didn’t admit that the loan was not a regulated one.

Following a full trial, the judge rejected Mrs Wood’s case that she had not borrowed the money or signed the relevant documents as a borrower in August 2013.

By around this time, the amount allegedly owed under the facility had grown to a staggering £155,781.41, with interest and costs.

Unable to obtain a possession order, Capital resorted to claim for a money judgment.

In October 2013, HHJ Godsmark QC gave judgment for £151,883.34 - approximately £4,000 less than the full claim.

However, that outcome was reached without questioning whether the loan was a regulated agreement or not. The judgment was appealed, and the regulation argument was at the core of appeal.

Heard on the 23rd April 2015, Mrs Wood appealed against the money judgment order.  

Mr Soofi Din, acting on behalf of Mrs Wood, claimed that the judge's decision to give judgment on the Facility on a purely contractual basis was “simply wrong in law”, after he had found that the loan was a regulated agreement.

Lord Justice Briggs stated that there was no real substance in the submission that Capital Bridging should justly be able to hold on to a judgment of over £151,000 “by reason of having been deceived into making a loan of £64,000 two years earlier which, if the defendant had been honest about her residential address, would plainly never have been made”.

“Mr. Din's main point, based upon error of law, is therefore a sufficient and indeed necessary basis for allowing this appeal,” the judge added.

“If my Lord and my Lady agree, this appeal should therefore be allowed. I would set aside the judge's money judgment but I would not, at this stage, dismiss the proceedings in their entirety.”

However, the judge added that it is “virtually inevitable” that Mrs Wood will have to pay a substantial sum of money to Capital Bridging if an application will now be made for an enforcement order.

“…I would give liberty to the claimant to apply in these proceedings for an enforcement order, and for directions as to any necessary amendment and exchange of evidence sufficient to enable the court to exercise its various powers under the CCA in relation to the enforcement of the Facility.”

It was speculated by the judge that if the money judgment is set aside, the lender’s charging order could not survive as there would be nothing for it to be based upon.

The judge concluded that he would be willing to consider on written submissions the nature and extent of any undertakings or other interim protection which the lender ought to be given, pending an application for an enforcement order.

Both Lady Justice King and Lord Justice Patten agreed.

Capital Bridging declined to comment.