This recent High Court decision focussed on whether the guarantor for a credit contract could escape liability under sections 118 and 120 of the Credit Contracts and Consumer Finance Act 2003 (CCCFA). Section 118 relates to “oppression” in the credit context, and section 120 allows a court to reopen “oppressive” credit contracts.
Mr Sharma had agreed to guarantee a loan between CSG Finance Limited (CSGF) and Payless Printing Limited, which related to finance for a commercial printer. Amongst other things, he had agreed to be jointly and severally liable for payment of the loan, fees and interest. He had also agreed that CSGF would have the right to request and obtain an “all moneys” mortgage over his family home.
Mr Sharma argued that he was induced to enter into the agreement because CSGF had acted oppressively by not giving him the opportunity to seek legal advice before signing it.
The High Court followed previous decisions that the focus of the “oppression” inquiry is on the acts of the creditor. A finding that the borrower (here, the guarantor) was not given the opportunity to take legal advice does not amount to oppressive conduct in itself. That would depend on the facts of each case.
Here, the circumstances of the case showed that Mr Sharma was a businessman who could be expected to understand the risks involved in giving guarantees. Accordingly, CSGF could not be said to have had a duty to make sure that Mr Sharma received legal advice. There being no evidence to suggest that CSGF dissuaded Mr Sharma from seeking legal advice, or had somehow taken advantage of the lack of advice, the High Court found that there was no oppression in this case.