Clydesdale Bank Plc v. (1) R Gough (t/a JC Gough & Sons) (2) Anne Michelle Gough [2017] EWHC 2230 (Ch)

In this case, the High Court considered: (1) whether the claimant (the Bank) was estopped from exercising its right to demand repayment and enforce security over the Defendants' assets by virtue of the alleged assurances it had given the defendants; and (2) whether the court had the power to make an order pursuant to section 140B of the Consumer Credit Act 1974 (the CCA) to affect the relationship between the first defendant and the Bank, if the relationship between the second defendant and the Bank under a guarantee was found to be unfair.

The first defendant, Mr Gough (trading as "J C Gough & Sons"), was a potato farmer with an extensive holding in Worcestershire. The second defendant, Mr Gough's wife, assisted him with certain matters in relation to the farm.

During November and December 2012, Mr Gough (and Mrs Gough in relation to a charge over one property that was jointly owned) entered into two loans totalling £4.25 million, an overdraft facility for £650,000, and a legal charge in favour of the Bank over a number of properties. Mrs Gough gave a personal guarantee to the Bank up to the sum of £4,910,000 plus interest. The farm continued to experience financial difficulties, such that the overdraft facility was formally extended a number of times, and by November 2014 Mr Gough had overdraft facilities of more than £1 million more than the original size of the overdraft. Eventually the Bank decided that it no longer wished to support the farm, and on 25 November 2014 it sought repayment from Mr Gough of all sums outstanding under the various facilities, and on the same date the Bank also made demand upon Mrs Gough under the guarantee in an amount of £4,910,000.

By the time of the litigation, neither Mr Gough nor Mrs Gough had made any payment to the Bank in respect of the sums owing, yet continued to live in properties subject to the Bank's charges (and derived an income from the same). The Bank brought proceedings seeking possession of the two properties to be given up to receivers, an order that Mr Gough repay the sums advanced under the facilities, and an order that Mrs Gough pay the sums under the guarantee.

Mr Gough's case against the Bank was that it agreed with him from the outset that he "…would have the opportunity to reduce his indebtedness to a sustainable level by the sale of assets, if the bank was not prepared to continue to support the business" and that the Bank was accordingly estopped from enforcing its rights to demand repayment of the facilities and enforce its security over the property assets. The court found that, on the particular facts, no particular representation or understanding arose in the parties' course of dealing and Mr Gough's defence accordingly failed.

In her defence to the sums claimed under the guarantee, Mrs Gough argued that, pursuant to section 140B of the CCA, the relationship between her and the Bank was unfair. The court found that, even if that relationship was unfair, that was irrelevant: the relevant relationship was that between the Bank and Mr Gough and Mrs Gough's defence would fail even if the relationship between her and the Bank under the guarantee was found to be unfair (which it was not).