Patel v Patel
QBD [2009] EWHC 3264 10 December 2009

The claimant and defendant had been family friends for over 50 years, the defendant now being 81 years old. In 1980 he bought a shop, financed by the claimant, and increased the borrowings in 1993 when he acquired a small supermarket. The claimant was a much more educated person than the defendant, was a qualified accountant and a successful businessman who now lives in Australia. The claims arose from a series of oral finance agreements. In 1992, the loans were consolidated into a fresh loan at 20% per annum, compounded monthly. The claimant reckons the total loan was £207,465, with the debt being £4,556,181 in 2008, and at time of the trial, £6 million.

The relationship between defendant and claimant was close, but it appeared that the defendant "deferred" to the claimant, and in cross-examination said "I am a businessman. He is a Chartered Accountant". He also acted in money management for the claimant, helping him to move funds between Zambia, Jersey and the UK. The terms of agreements were not clear, with some featuring a percentage of shop profits. In 2007 there was a meeting between the families, where the claimant offered to reduce the interest rate.

The court undertook a forensic analysis of the accounting between the party and rejected the defendant's claims as to forgery and misunderstanding; it also noted that he had made repayments, and had received considerable benefit from the money lent. However, it considered that the relationship between the parties blurred the formal nature of the transaction, in that the claimant rarely made any request for repayment and never sent reminders, this being adverse to the defendant (since interest was rolling up on the unpaid balance). The interest rate charged from 1992 was also unfair to the defendant and therefore made an order that no further interest should be charged on the 1992 balance. The defendant therefore has to repay £207.465.