A firm of solicitors borrowed money from the Respondent fund. The Appellants were jointly and severally liable to repay the debt as partners in that firm.
The Respondent served statutory demands on the Appellants following non-payment of the loan. The Appellants unsuccessfully applied to set aside the statutory demands and appealed to the High Court. The Appellants argued that the debt was genuinely disputed as the loan had, in fact, been advanced based on a separate verbal agreement and/or, the loan was tainted with illegality because receivers were appointed over the fund and were pursuing proceedings against various third parties alleging mismanagement of the fund and fraud.
The Deputy Judge agreed with the Chief Registrar that there was no evidence on the facts of an oral agreement and, even if there had been, the Judge would have found that the loan was repayable on demand, which it had not been. On illegality, the Judge found that the purported illegality was entirely collateral to the loan agreement and did not relate to the recovery of this particular loan.
The Appellants also argued that there was an implied representation given by the Respondent that it was carrying on a proper business in good faith. The Judge found however that, even if such a representation could be implied and had been breached, that would entitle the Appellants to rescind the agreement, but they would still have to repay the loan, which they couldn’t.
The Judge therefore dismissed the appeal.
Noble and Stott v Axiom (Case numbers 109 and 110/SD/2015)