Julian Gun Cuninghame appeared as counsel for the appellants in the case of Kumar and others v LSC Finance Limited [2024] EWCA Civ 254.

The Court of Appeal affirmed that a declaration under articles 60C and 60O of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2021 (“the RAO”) did not constitute a declaration for the purposes of article 61A(3) of the RAO and was defective. Whether an agreement that would otherwise be a regulated mortgage contract under article 61(3) of the RAO was in fact an investment property loan under Article 61A(1) of the RAO (i) less than 40% of the land to be used in connection with a dwelling by the borrower and ii) entered into by the borrower wholly or predominantly for business purposes) depends on a fact-sensitive enquiry. The Court of Appeal said that it would be wrong in principle to treat a defective declaration as having the same effect as a valid one, but the judge was entitled to find that the defective declaration objectively evinced an intention on the contracting parties to enter into investment property loans as just one factor in a wide-ranging fact finding by the judge. The Court of Appeal rejected a submission that the defective declaration should be disregarded for all purposes. The Court of Appeal also commented that, if a declaration gives rise to the statutory presumption under article 61A(3) of the RAO that the loan is wholly or predominantly for business purposes, the only circumstances in which the presumption will not be treated as conclusive as to the purpose of the loan is if the lender knows or has reasonable cause to suspect that the agreement is not entered into by the borrower wholly or predominantly for a business purpose carried on by a borrower (article 61A(4) of the RAO). The Court of Appeal also said that the proviso in article 61A(4) demonstrates that a declaration under article 61A(3) of the RAO cannot operate as an estoppel by representation or convention precluding the borrower from adducing evidence to show that the statements in the declaration were factually incorrect.

The Court of Appeal rejected an appeal on the construction of a clause in a guarantee and rejected an application to amend the grounds of appeal and adduce fresh evidence on the basis of an allegation that the creditor’s two main witnesses had lied in a subsequent criminal case as prosecution witnesses and that undermined their credibility as witnesses at trial, which the judge had accepted.

A link to the judgement can be found below.