High Court decision on unenforceable debt

Bradley Say and Simon Popplewell, both of Gough Square, appeared before the High Court: In the matter of London Scottish Finance Ltd (in Administration) v Craig and others [2013] EWHC 4047 (Ch). This was an application for directions in the administration of London Scottish Finance Ltd which considered the extent to which money paid under irredeemably unenforceable consumer credit agreements was recoverable by a debtor.

The Chancellor held that debtors had potential claims under section 140A CCA 1974 for the repayment of sums paid by them in respect of irredeemably unenforceable agreements, where (i) those payments were encouraged by the creditor falsely stating in debt collection letters that the loan agreements could be enforced by taking possession proceedings and (ii) the debtor only made payment because of those letters. However, such letters would not give rise to an ‘unfair relationship’ where the agreement was not irredeemably unenforceable.

Read the London Scottish v Craig.