Handing down the lead judgment in CFL Finance v Gertner [2021] EWCA Civ 228, Lord Justice Newey said the case ‘raises an important and difficult issue as to when, if ever, the Consumer Credit Act 1974 (CCA) applies to agreements settling litigation’.
Finding in Gertner’s favour, Newey LJ said: ‘If the settlement agreement provided "credit" within the meaning of the CCA, I do not see why the fact that it served to settle the proceedings CFL had brought against Mr Gertner should preclude application of the CCA.’
A Tomlin order is a court order staying a court action on terms agreed between the parties involved. The case concerned a bankruptcy petition, which followed a dispute over a loan. CFL had lent £3.5m to a company owned by the Gertner family, to which Moises Gertner gave a personal guarantee.
Fred Philpott, Gough Square, who acted for Gertner, said: ‘The court held that there was a genuine dispute as to whether the underlying agreement was regulated and unenforceable.
‘The crux of the decision was that if there was an undisputed debt and the creditor agreed to accept payments by instalments, this could be a regulated consumer credit agreement. If it was issues as to the status of the debtor (eg limited company or “large” partnership or not) and whether the creditor was making the agreement by way of business will be relevant.
‘If there was a genuine dispute as to the debt which led to the settlement (whether in a Tomlin order or not), the legislation would not impact. Where the “dividing line” fell did not in the case need to be decided.’
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