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Woods vapital Bridging Financing Limited EWCA Civ 451
The application was for authorisation to lodge an appeals against a monetary complaints procedure at the end of mortgages ownership procedures. The case underlines the importance of compliance with all provisions of the Financial Markets and Services Act 2000 (Regulated Activities) Order 2001 ("FMSA") if creditors wish to be exempted from regulatory work.
Capital Bridging Finance Limited (Capital), the plaintiff, filed an application against Ms Wood (Wood) concerning the mortgages procedure. Judge of first instance delivered £151,883 judgment. with an interest rate of 3% under the conditions of a credit facility agreement (the "Agreement") between the two sides. Woods was an old woman who had lived most of her days in the 4 Hardwicke Road, Beeston (the "estate").
Your son-in-law, Mr Johnson ("Johnson"), wanted funding for the purposes of his company and asked Wood to request a bridge credit from Capitals that would provide a mortage on the land as collateral. Equity was in the non-regulated credit line segment (non-regulated under the Consumer Credit Act 1974 (CCA) and FMSA).
CCA Section 16B contains a finding that the regime of £25,000 or more contracts for consumers' credits is not permissible if they were acquired for the purposes of conducting transactions. 16B (2) provides this assumption if there is a specific statement by the obligor and 16B (3) contradicts the assumption if the creditor knows or has reason to believe that the contract was not concluded entirely or predominantly for the qualified object of the transaction.
There was a statement in the agreement, which was afterwards endorsed by Wood, declaring that the object was commercial. Each party to the agreement who was party to the signature knew that Wood was intending to raise money for a member of the Wood household to use for commercial purposes. Therefore, at no point was the capital deluded or fooled by Wood.
In the first court of law, the judge found that Wood had taken dishonest part in the misrepresentation of the capital because she had actually ceased to live on the property and had faked account statement. Wood's undersigned letter of hypothecation was flawed because it had not been duly authenticated. But Johnson neglected to give the money to Wood, and then went to Northern Cyprus with his wife and daughter, so Wood had to bear the aftermath.
Wood's case at court was that she hadn't lent any cash and had merely autographed the documentary as a testimony. However, the judge dismissed this case but accepted that the document was invalid and could therefore only become effective as an appropriate hypothec. Ownership was in vain as Capital had not met the statutory conditions for taking out a mortgages as a court fee, which meant that the mortgages were an appropriate mortgages and came into force as a suspensive requirement and not as a contract as such.
That' why Captain wanted a financial verdict on Wood. Wood's appeals were based on the fact that the agreement was governed and not exempted because it was not intended for the purposes of its company, and because it did not conform to the shape and substance necessary under the CCA, it was not enforceable without the Court's consent, which had not been requested by Capitals under Section 127.
The fact that the judge was legally incorrect to make his ruling on a strictly contractually based matter, since the agreement was a regulatory work. The Briggs LJ appealed and ruled that the agreement was considered regulatory and not exempted. The Court found that the monetary judgement had to be quashed since no writ of execution had been sought under section 127.
The case was not rejected, however, and Capital was allowed to file a writ of execution under section 127 with the court. It is clear from the Court of Appeal's ruling that there is clear room for manoeuvre for exemption from the use of the CCA's business: that it must be provided for loans exceeding 25,000 and must be contracted entirely or predominantly for the purpose of the borrower's operations or the proposed operations.
The case serves as a reminder to creditors to ensure that all parts of the waivers are rigorously respected (now included in the FSMA) if a creditor wants to take benefit of the waivers from regulatory arrangements. Non-compliance may lead the court to make the arrangement inoperable.