Portman Building Society v Dusangh [2000]
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Portman Building Society v Dusangh [2000] 2 All ER (Comm) 221 brings to light the distinction between an unwise transaction and one procured by morally reprehensible conduct, illustrating the importance of moral culpability in avoiding such transactions.
The facts revolved around a 72-year-old man with limited English proficiency and a modest income. The defendant took out a mortgage from Portman Building Society to support his son's venture – the purchase of a supermarket. The son, in turn, committed to repaying the mortgage. However, when the supermarket failed, and the son defaulted, Portman Building Society sought to enforce its charge over the old man's home. In defence, the old man argued that the charge should be avoided due to unconscionable bargain.
The Court of Appeal, in its judgment, upheld the validity and enforceability of the charge. Simon Brown LJ acknowledged that the old man, in modern terms, could be considered poor and ignorant, and the transaction was indeed unwise. However, he emphasised that building societies cannot be expected to police transactions for wisdom when parents seek to assist their children. The court held that the commercial unwise nature of the transaction did not equate to moral culpability, asserting that the bank had not acted in a morally reprehensible manner.
This case aligns with the precedent set by the House of Lords in Boustany v Pigott [1995], emphasising a departure from rigid criteria, as seen in Fry v Lane [1888], and focusing on the conduct of the party relying on the transaction. It underscores that an unwise transaction, absent morally reprehensible conduct, does not render it voidable for unconscionable bargain.
It should be noted that the Consumer Credit Act 1974, as amended, provides remedies to undo credit agreements where the relationship between the creditor and debtor is unfair. However, Portman Building Society v Dusangh suggests that relief under the Consumer Credit Act might not be applicable, given the absence of unfairness in Portman Building Society's actions in enforcing its security. The case reinforces the nuanced evaluation of transactions, considering both commercial prudence and moral culpability in the realm of unconscionable bargain.
The facts revolved around a 72-year-old man with limited English proficiency and a modest income. The defendant took out a mortgage from Portman Building Society to support his son's venture – the purchase of a supermarket. The son, in turn, committed to repaying the mortgage. However, when the supermarket failed, and the son defaulted, Portman Building Society sought to enforce its charge over the old man's home. In defence, the old man argued that the charge should be avoided due to unconscionable bargain.
The Court of Appeal, in its judgment, upheld the validity and enforceability of the charge. Simon Brown LJ acknowledged that the old man, in modern terms, could be considered poor and ignorant, and the transaction was indeed unwise. However, he emphasised that building societies cannot be expected to police transactions for wisdom when parents seek to assist their children. The court held that the commercial unwise nature of the transaction did not equate to moral culpability, asserting that the bank had not acted in a morally reprehensible manner.
This case aligns with the precedent set by the House of Lords in Boustany v Pigott [1995], emphasising a departure from rigid criteria, as seen in Fry v Lane [1888], and focusing on the conduct of the party relying on the transaction. It underscores that an unwise transaction, absent morally reprehensible conduct, does not render it voidable for unconscionable bargain.
It should be noted that the Consumer Credit Act 1974, as amended, provides remedies to undo credit agreements where the relationship between the creditor and debtor is unfair. However, Portman Building Society v Dusangh suggests that relief under the Consumer Credit Act might not be applicable, given the absence of unfairness in Portman Building Society's actions in enforcing its security. The case reinforces the nuanced evaluation of transactions, considering both commercial prudence and moral culpability in the realm of unconscionable bargain.
