RESIDENTIALlegal
‘Unfair’ loans haunt lenders
Blemain Finance v Peter Bentley
A carpenter from Bridgend, Wales, has won a five-year
stay on any repossession proceedings against him
by his lender. David Foster, Dispute Resolution Partner
at Barlow Robbins summarises this interesting case.
T
he case of Blemain Finance and Peter Bentley was settled of a legal precedent. If this case had gone to a trial on the facts,
with a Judge’s Order on 28th October 2009. To summarise it could have dealt a heavier blow to the finance sector. It is unlikely
the facts, Peter Bentley had taken a second mortgage over that Blemain Finance have made this compromise purely out of
his property for £40,000 but struggled to maintain compassion to Peter Bentley’s circumstances but rather from
repayments following the death of his mother and his father’s onset analysing their chance of success, as well as the commercial risk
of Alzheimer’s. The loan went into arrears and by the time he was if they were to lose.
able to return to work again, the recession had set in and he was With this in mind, what impact will this case have on the
unable to earn enough money to pay the loan; his caring industry as a whole? Lenders may now want to proceed with
responsibilities meant his working hours were slashed from 48 a more cautious approach to lending to avoid similar actions from
hours per week to a mere 19 hours, which led to a dramatic drop taking place. It has been reported that CCLS, Peter Bentley’s
in income, causing him to fall behind with his loan repayments. solicitors, have many other claims of a similar nature. It is
Blemain Finance took repossession proceedings against him. unknown how many other claims management companies will
CCLS, Peter Bentley’s solicitors, argued that the loan agreement now plan to take up similar action with lenders. Although no legal
was an unfair relationship under s.140A of Consumer Credit Act precedent has been set, lenders may now find that they are being
1974. This section was added into the 1974 Act by the Consumer drawn into these sorts of claims. Following this out of court
Credit Act 2006, which settlement, does this mean that
repealed sections 137-140, the flood gates are going to open
extortionate credit bargains.
Borrowers will view this
to the masses? Some would
Unfair relationships are seen argue that it is only a matter of
as covering a wider ambit than
as a huge victory and
time before the court will have
extortionate credit bargains. to make a judgement on these
CCLS claimed that Blemain
it may even encourage
types of cases.
Finance had lent to Peter In the meantime, borrowers
Bentley irresponsibly and
others to try to argue
will view this as a huge victory
claimed they took advantage of and it may even encourage those
the unfortunate situation Peter
that their loan is an
who find themselves in a similar
Bentley found himself in. They situation to try to argue that their
questioned the checks that
‘unfair relationship’.’
loan is an unfair relationship.
Blemain Finance had carried In the end though, there is no
out on Peter Bentley, such as certainty that all claims of unfair
his ability to afford such a loan. relationships will be meant with a sympathetic ear. The reason
The matter was settled out of court, but the terms of the Order there has been so much media attention in relation to this case
have been the topic of much discussion. The terms of the Order is because it is widely inconsistent with the increased numbers
allowed for the reduction in the monthly payment from £550 t of repossessions and debt recovery actions that we hear about
o £150. In addition, no further interest was to be added to the loan. almost daily in the news.
By the time this case settled the loan of £40,000 was worth around The banks may remain victorious over the recent unauthorised
£47,000. Crucially, there is a five year stay on mortgage overdrafts judgement in the Supreme Court but it remains by no
repossession proceedings and after this period, Blemain Finance means certain who is going to win in the next battle between the
would only be allowed to take possession of the property if there consumer and the finance sector.
have been at least 12 months of arrears at the new monthly
payments. In the High Court in Cardiff Judge Milwyn Jarman David Foster, Dispute Resolution Partner Barlow Robbins
added a further provision that no charges or legal costs could Tel 01483 464243. www.barlowrobbins.com
be levied against Peter Bentley. Email davidfoster@barlowrobbins.com
It is important to note that this case did not end up going to trial,
therefore no legal precedent was made. Many have viewed Blemain
www.propertydrum.com/articles/blemain
Finance’s out of court settlement as a means of avoiding the setting
What’s your opinion of this case? Log on and share your views.
40 FEBRUARY 2010 PROPERTYdrum
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