Dex Ltd v Christian
| Jurisdiction | Cayman Islands |
| Judge | (Richards, J.) |
| Judgment Date | 28 October 2019 |
| Court | Grand Court (Cayman Islands) |
| Date | 28 October 2019 |
(Richards, J.)
Contract — loans — variation or waiver of interest — letter from lender offering to reduce interest not variation as no consideration — debtor cannot rely on waiver if did not act on it
Held, ruling as follows:
There was no consideration such as to make the letters enforceable as a variation of the contract. However, the loan agreement expressly provided that the plaintiff had unilateral power to waive interest rates. On the plain reading of the letters, any possible variation or waiver was specifically as to monthly payments going forward. The default interest term remained unchanged. In any event, the defendant could not rely on the waiver (if waiver it was) because he did not act upon it in any way and, most importantly, he did not meet the condition of payment which was set out therein. The defendant made no payments following the April 30th, 2015 letter. The defendant was liable to pay default interest at 23% as agreed in the original loan agreement, and he owed $26,739.86 at the date of the hearing (paras. 30–34; paras. 39–40; paras. 45–48).
(1)Al Sadik v. Investcorp Bank BSC, 2012 (2) CILR 33, considered.
(2)Bennett v. Att. Gen., 2010 (1) CILR 478, considered.
(3)Foakes v. Beer, [1881–85] All E.R. (Rep.) 106; [1884] L.R. 9 App. Cas. 605; (1884), 54 LJQB 130; 51 LT 833; 33 WR 233, considered.
(4)Jukebox L.P., In re, 2009 CILR N [32], considered.
(5)Nash v. Paragon Finance plc, [2001] EWCA Civ 1466; [2002] 1 W.L.R. 685; [2002] 2 All E.R. 248, referred to.
(6)Nike Real Estate Ltd. v. De Bruyne, 2002 CILR 31, considered.
(7)Rock Advertising Ltd. v. MWB Business Exchange Centres Ltd., [2018] UKSC 24; [2019] 1 A.C. 119; [2018] 2 W.L.R. 1603; [2018] 4 All E.R. 21, considered.
(8)Selectmove Ltd., Re, [1995] 1 W.L.R. 474; [1995] 2 All E.R. 531, considered.
(9)Vanbergen v. St. Edmunds Properties Ltd., [1933] 2 K.B. 223, considered.
(10)W.J. Alan & Co. Ltd. v. El Nasr Export & Import Co., [1972] 2 Q.B. 189; [1972] 2 All E.R. 127, considered.
(11)Williams v. Roffey Bros. & Nicholls (Contractors) Ltd., [1991] 1 Q.B. 1; [1990] 2 W.L.R. 1153; [1990] 1 All E.R. 512, considered.
(12)Woodhouse AC Israel Cocoa Ltd. SA v. Nigerian Produce Marketing Co., [1972] A.C. 741; [1972] 2 All E.R. 271, referred to.
The plaintiff sought repayment of a loan with interest.
The plaintiff company and the defendant had entered into a series of written loan agreements by which the plaintiff agreed to lend the defendant money. The terms of repayment included monthly interest as well as default interest, both at 23% on the sums loaned. The defendant defaulted on the loans. In 2017, the plaintiff claimed repayment of the sum of $23,000 together with legal fees and interest at the contractual rate of 23%. The total sum then outstanding was $43,857.17.
The defendant admitted the principal amount of the debt and summary judgment was granted to the plaintiff as to the principal sum of $23,000. The remainder of the claim was to proceed to trial.
The sole issue between the parties was whether the interest had been reduced from 23% to 14%. The plaintiff had sent the defendant two letters. The first, dated April 25th, 2015, provided inter alia that—
“During our telephone conversation of today, you said that you agree to repay the $23,000 owing but only if we reduce the interest rate to 14% per annum and agree to equal monthly payments over 36months, with such payments to be made direct to our bank account at . . . commencing 31 May 2015.
. . .
If you will agree to what we have set out above, with all other terms and conditions of the original Loan Agreement dated 27 April 2014 to remain in force, we are willing to recalculate the accrued interest at the rate of 14% per annum from 1 September 2014 to 30 April 2015, assuming that you would make your first payment on 31 May 2015. That would then be $2,134.90. Adding the legal fees of $378.00, then the monthly payment to repay $25, 512.90 over 36 months would be $871.97. However we reserve the right to proceed with legal action to recover the amount owing should you not make the agreed monthly payments.
Please confirm your agreement by signing and returning to us a copy of this letter by Wednesday 29 April 2015. This offer is null and void if you do not sign and return a copy of this letter by that date.”
The second letter, dated April 30th, 2015, which also required confirmation of the defendant’s agreement to be evidence by return of a copy letter with his signature, provided inter alia that—
“Further to our letter dated 25 April 2015, we wish to confirm our subsequent telephone conversation of this morning.
You stated that you are agreeable to pay the amount owing, as set out in our letter of 25 April. However, after reviewing your financial position you would like to make changes to the repayment. You would like to start monthly payments on 30 June 2015 with the amount owing amortised over 48 months, rather than 36 months. You said that by way of lump sum payments you will repay the amount owing within 36 months.
This will mean that interest of $273.47 for the month of May will have to be added to the figure mentioned in our last letter. The total then is $25,786.37. Monthly payments amortised over 48 months, will be $704.65.”
The defendant made no payments following this letter.
The plaintiff submitted that (a) the letters did not amount to a variation of the loan agreement; (b) they amounted to no more than forbearance and the terms of the original loan agreement remained in effect; (c) there was no consideration in order for the purported variation in interest rates to be effective; (d) the letters did not purport to be a waiver or deferral of interest payments; (e) even if there were a waiver, the defendant had not relied on it; (f) any variation would be to cl. 3 which referred to monthly interest, not to cl. 4 which referred to default interest; and (g) the two letters could only be read to mean that the plaintiff intended to take legal action on the original terms if the defendant did not comply with the newly agreed terms.
The defendant submitted that (a) the loan agreement provided for the unilateral option of the lender to waive or defer any or all payments of interest; (b) the letters should be construed as a unilateral waiver by theplaintiff, varying the interest rate across the board to 14%; (c) both parties agreed on April 30th, 2015 that the interest rate should be 14%; (d) the letters should be construed as applying to monthly and default interest; and (e) the second letter did not make the new 14% interest rate subject to any condition and did not refer to reverting to the original terms.
J. Kennedy for the plaintiff;
C. Flannigan for the defendant.
1 RICHARDS, J.:
Introduction
The plaintiff company, Dex Ltd., operates out of registered offices in George Town, Grand Cayman and is in the business of private lending. It offers loans to persons who are unable to obtain financing from larger banking institutions and thus charges a higher rate of interest than the banks.
2 Between September 2013 and April 29th, 2014, the plaintiff, and the defendant, Noel Christian, entered into a series of written loan agreements. By these agreements, the plaintiff agreed to lend to the defendant various sums of money. The terms of payment included monthly interest as well as default interest, both at an interest rate of 23% on the sums loaned. The defendant defaulted on the loans.
3 By writ of summons filed on August 21st, 2017, the plaintiff claimed repayment from the defendant of the sum of $23,000 together with legal fees of $5,146.60 and pre- and post-judgment interest from September 1st, 2014 at the contractual rate of 23%. The total sum then outstanding at the date of the filing of the writ was $43,857.17.
4 On September 19th, 2017, the defendant acknowledged service and indicated an intention to defend. On September 29th, 2017, he filed a defence in which he admitted the principal amount of the debt but asserted that he had been advised orally by Mr. Rex Rankine, a director of Dex Ltd. that he would not have to repay any amounts other than the principal loan. He also asserted that the interest rate of 23% amounted to a penalty and is not enforceable.
5 By summons filed on October 25th, 2017, the plaintiff applied for summary judgment pursuant to GCR O.14, r.1 in respect of the principal sum claimed, on the basis of the defendant’s admission as to the principal debt.
6 By consent order made on January 26th, 2018, summary judgment was granted to the plaintiff as to the principal sum of $23,000. The remainder of the claim was to proceed to trial. Both parties filed witness statements and submissions which identified the single issue between them as being whether Mr. Rankine had made oral representations to the defendant that he would not have to pay any interest on the sums borrowed. Mr. Rankine denied making such statements except for on one occasion on August 27th, 2014 when at a meeting with the defendant he agreed, on behalf of the plaintiff, to the refinancing of the defendant’s previously unpaid loans by way of a fresh consolidated loan with all past outstanding interest being waived. Following this meeting, a formal agreement was prepared and signed by all parties.
7 On the morning of trial, the court was advised that the issue between the parties had narrowed even further and was no longer whether or not interest was in fact payable. The sole question between the parties which requires resolution is whether the interest had been reduced from 23% to 14%. The differing calculations between the parties is as follows:
| The plaintiff: | |
| Interest rate claimed | 23% |
| Date of loan | September 1st, 2014 |
| Date of trial | September 20th, 2019 |
| Number of days | 1845 |
| Daily interest | $14.49 |
| Total interest due | $26,739.86 |
| The defendant: | |
| Interest rate claimed | 14% |
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