UK: When Do The Terms Of An Unregulated Agreement Amount To An Unfair Relationship Under s.140A Consumer Credit Act 1974

Last Updated: 2 April 2019
Article by Jackie Hanlon, Karen Jacobs and Amandeep Khara


The recent decision in Greenlands Trading Ltd & Another v. Girolama Pontearso [2019] EWHC 1282 (Ch) has shed some light on the court's approach to claims made by borrowers that the terms of their loan agreement amount to an unfair relationship under section 140A of the Consumer Credit Act 1974 (CCA).


Ms Girolama Pontearso obtained a six-month bridging loan of £132,000 from Fourth Bridgefast Partnership, secured on a residential property with a monthly interest rate of 1.35 per cent and a default interest rate of 3 per cent per month. She intended to refinance the loan against the security of a separate commercial property but this strategy did not materialise. Following her default on the first bridging loan, she agreed to take further bridging loans from Greenlands Trading Limited and Wargrave Trading Limited (the Lenders), also for six months, but with a monthly interest rate of 1.45 per cent and a default interest rate of 3 per cent per month, again with a similar exit strategy.

Subsequently, Ms Pontearso defaulted on her repayments and the Lenders issued proceedings for possession and a money judgment. She defended on the basis that there was an unfair relationship under section 140A CCA, which reads as follows:

"(1) The court may make an order under Section 140B 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 things 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)."

No expert evidence about industry standard rates was provided at trial but the judge accepted the Lenders' evidence and made the orders sought.

The appeal

Ms Pontearso's appeal was on the following basis:

  1. The judge was wrong to accept evidence from the Lenders that the 3 per cent default interest rate followed standard industry practice, as it was unsupported by any other evidence.
  2. The judge placed too much emphasis on Chubb v. Dean [2013] EWHC 1282 in reaching his decision as to the level of default interest rate in bridging loans that may give rise to an unfair relationship under section 140A.
  3. The judge was wrong to find that the borrower had a workable exit strategy from the second bridging loan.

In respect of point one, Ms Pontearso took issue with the fact that the trial judge had allowed the Lenders to provide self-serving evidence on whether the interest rate was fair. On appeal, Mr Justice Nugee found that it was open to the first instance judge to allow evidence from the Lenders in relation to standard industry rates. No objection to it had been made at the time and the judge undoubtedly should have taken into account the belated way it came out when deciding how much weight to give to that evidence. However, it was important to bear in mind that deciding to allow this evidence was a case management decision. The judge's decision to accept 3 per cent was a factual finding which was difficult to overturn. It was not plainly wrong, and it was not possible to interfere with the judge's finding that the rate was not unfair.

As to point two, Ms Pontearso argued that the judge had placed too much emphasis on Chubb v. Dean, which is a case concerned with the Unfair Terms in Consumer Contract Regulations 1999 (UTCCR). The exercise in determining whether a relationship was unfair under section 140 CCA is not identical to that in determining whether a term is unfair under the UTCCR. The appeal judge accepted there could be a number of other factors that make a relationship unfair under section 140A CCA that would not meet the test under the UTCCR although this was not necessarily conclusive of the question of whether the judge was wrong in this instance.

In any event, the appeal judge was not certain that the judge had placed any particular reliance on Chubb v. Dean. It may have been that he was referring to it as an illustration of the fact that a default rate of 3.1 per cent had been held to have followed industry standards. The points noted in Chubb v. Dean concerning the fact that the interest rate was clear on the face of the documents and that the defendants were not only legally advised, but were clearly intelligent consumers foreshadowed the list of matters to which Lord Sumption specifically referred in Plevin v. Paragon Personal Finance Limited [2014] 1 WLR 4222.

In Plevin Lord Sumption provided a list of matters such as the characteristics of the borrower, her sophistication or vulnerability, the facts that she could reasonably be expected to know or assume, the range of choices available to her and the degree to which the lender was and should have been aware of these matters, which would be relevant in deciding whether a relationship was unfair.

Ultimately, in this case too, the judge found as fact that not only was the borrower legally advised, but she appeared to know her own mind when it came to lending and mortgages and she knew that they were short-term loans which had to be repaid.

As to point three, Mr Justice Nugee pointed out that the appeal court should not substitute its own view as to the likelihood of an exit strategy working. The judge's conclusion that the borrower had a possible exit strategy was not wrong given that the trial judge had the advantage of being immersed in the facts of the trial in much more depth than an appellate court.

Overall, the question of whether a relationship was unfair is not limited by the borrower's perception. What is required is an exercise of forensic judgment of all the relevant facts including the standard of commercial conduct reasonably to be expected of a lender and the degree of sophistication or vulnerability of the borrower. In this particular case, the borrower had received independent legal advice in respect of the second bridging loan. The solicitor expressly stated "you must carefully consider and calculate the repayment strategy both in terms of the monthly interest and the capital repayments at the end of each loan term". The question of unfairness is for the court's objective assessment and taking everything into account Mr Justice Nugee dismissed the appeal.


This is a useful case which should be considered by all lenders, particularly those involved in unregulated, short-term, secured lending, when faced with the challenge of an unfair relationship. When things go wrong, a borrower may complain about the rates of default interest and other charges. This case establishes that a lender is able to adduce its own evidence about industry standards although expert opinion may still be preferred. If a challenge is made, the court will exercise careful judgment taking into account all the relevant facts including the standard of commercial conduct reasonably to be expected of a lender and the degree of sophistication or vulnerability of the borrower.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions