PT-2021-000393 - [2025] EWHC 2749 (Ch)

Aspects of my First Judgment were not touched by the Court of Appeal Judgment, including much of the factual background. Those matters, obviously, are no longer in dispute, but in the interests of making this judgment easier to follow as a free-standing decision I summarise them here.

Over a number of years Ali Houssein (Mr Houssein) had built up a portfolio of residential properties. One of those properties was the family home (71 Hamilton Road); the others were held as investments (the Downhills Way Properties). While Mr Houssein had been the driving force in building and managing the portfolio, some of the Downhills Way Properties were held in the name of his wife, Nuray Houssein (Mrs Houssein), or in their joint names. 71 Hamilton Road was also held jointly.

The Downhills Way Properties, but not 71 Hamilton Road, were used as security for various loans. In June 2020 one of those loans (the Bridge Loan) needed to be refinanced. Mr Houssein and his son, Houssein Houssein, asked a relative if they could recommend anyone to assist in the process; they were referred to Andreas Liondaris of Premier Finance Ltd (Premier).

Andreas Liondaris in turn introduced Mr and Mrs Houssein and Houssein Houssein to Chris Stylianides (Mr Stylianides), a Business Development Manager at the First Defendant (LCL). Ultimately, LCL and the Claimants entered into the following agreements:

As an unregulated moneylender LCL was not authorised to make loans to individuals secured by way of mortgage over the property where they resided. To address this, two steps were taken:

I found that Houssein Houssein had taken over the day-to-day running of the property portfolio and largely took the lead on the refinancing with LCL. I further found that at all materially relevant times he was aware of the non-residence requirement but that he did not communicate it to his parents, on whose behalf he was acting.

On 29 July 2020 an inspection of 71 Hamilton Road was carried out by Mr Stylianides on behalf of LCL. The purpose of the inspection was to confirm that 71 Hamilton Road was vacant prior to drawdown on the Loan. I found that the inspection was a sham, concocted to create the impression that renovation works were ongoing when in fact the Housseins still resided there. I further found that Mr Stylianides, Andreas Liondaris and Houssein Houssein (but not Mr or Mrs Houssein) were fully aware of the true position. Mr Stylianides’ knowledge was imputed to LCL such that it, too, was aware of the true position when drawdown under the Facility Letter occurred on 7 August 2020.

Very shortly after drawdown LCL was informed by one of its investors that the Housseins continued to reside at 71 Hamilton Road. LCL’s solicitors, Gunnercooke, wrote to the Housseins requiring them to vacate the property, relying on the non-residency provision of the Facility Letter. When the Housseins refused to do so LCL appointed the Second Defendants.

The default on which LCL relied in taking enforcement action was the alleged breach of the non-residency obligation. The effect of my finding as to Mr Stylianides’ knowledge was that the default on which LCL had purported to rely had in fact been waived when it permitted drawdown with the knowledge, imputed from Mr Stylianides, that at the date of drawdown the Housseins were still in residence at 71 Hamilton Road. The enforcement steps taken in respect of that alleged breach were accordingly void and of no effect.

At the same time, by trial sums remained outstanding under the Facility Letter. The defined Repayment Date under the Facility Letter was 12 months after drawdown. There was some debate as to when that was. The Loan ran for 12 months, so elapsed on 7 August 2021, but that was a Saturday which I believe may be why the parties had concluded that the Repayment Date was the next business day, 9 August 2021. Before me it was, I think, agreed that 7 August 2021 should be treated as the correct date.

Of the capital, £1.2 million had been repaid on 28 May 2021. Interest was more complex. There are two rates of interest under the Facility Letter, the standard rate of 1% per month (the Standard Rate) and the Default Rate, which as I have noted is 4% compounded monthly. The total amount outstanding therefore depended on which rate applied and for which period.

I found that the Default Rate was a penalty, and so would have been unenforceable in any event. However, I further found that the Standard Rate continued to apply if the Loan was not repaid on the Repayment Date. The Court of Appeal Judgment reversed both findings. Only the first has been remitted back to me for further determination.

For completeness, I also made the following findings that were not the subject of the appeal: