Case No: B2/2012/1686
Neutral Citation Number: [2013] EWCA Civ 475

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
Her Honour Judge Hazell Marshall QC
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 08/05/2013
Before :

LADY JUSTICE ARDEN
LORD JUSTICE SULLIVAN
and
SIR STANLEY BURNTON
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Between :

	Consolidated Finance Limited	Claimant/
Respondent 	
	           - and -		
	Tracy Anne Collins
Innes Graham Collins	Defendants/
Appellants	
			
	and  between:
		
	Consolidated Finance Limited                 	Claimant/
Respondent	
	and		
	Nicholas Charles Rothoff	Defendant/ 
Appellant 	
			
	and between:		
	Consolidated Finance Limited	Claimant/
Respondent 	
	and		
	Maurice Bailey
Diane Bailey	Defendants/
Appellants 	
			
	and between		
	Consolidated Finance Limited	Claimant/
Respondent 	
	and		
	John Hugh Toye
Ann Elizabeth Toye	Defendants/
Appellants 	
	and		
	The Office of Fair Trading	Intervener 	
- - - - - - - - - - - - - -
 (Transcript of the Handed Down Judgment of
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- - - - - - - - - - - - - -
Edward Bartley Jones QC and John Pugh (instructed by Chadwick Lawrence) for the Appellants  
Mark Cawson QC (instructed by Wragge & Co) for the Respondent
Julia Smith (instructed by the OFT) for the Intervener 

Hearing date : 16 April 2013
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Judgment
Sir Stanley Burnton : 
Introduction
1.	Consolidated Finance Limited, to which shall I refer as “Consolidated”, brought five claims seeking payment of sums alleged to be due to it by the Defendant Appellants and to enforce the mortgages over the Appellants’ homes executed by the Defendants to secure payment of those sums. The Appellants dispute their respective liabilities to Consolidated and also contend that the agreements under which they are alleged to have incurred their liabilities to it are regulated agreements for the purposes of the Consumer Credit Act 1974 (“the Act”) that do not comply with the requirements of the Act. 
2.	The various agreements on which Consolidated relies are in substantially the same terms, and there is little if any material difference between the facts of the five claims brought by Consolidated. In these circumstances, Consolidated and the various Defendants agreed preliminary issues common to all five of Consolidated’s claims. The preliminary issues were:
“(1) Has [Consolidated] proved that it loaned any money to the Defendants at all. And if so how much and when, and whether any such loan was provided under the terms of the facility letter?
(2) In the light of the nature of any lending identified in considering issue 1 above, is the Facility Letter, in each case,
a. a regulated agreement, or
b. an exempt agreement
under the Consumer Credit Act 1974?”
3.	On 14 June 2012, Her Honour Judge Hazell Marshall QC sitting in Central London County Court gave judgment upholding the claims of Consolidated. She held that it had lent the moneys it claimed to have lent to the Appellants under the agreements it relied upon, and that each of those agreements was an exempt agreement under the Act and therefore enforceable.
4.	This is my judgment on the Defendant Appellants’ appeals against the judge’s order.
The issues
5.	There are two fundamental issues:
(1)	Leaving aside the effect of the provisions of the Act, are Mr and Mrs Collins indebted to a company called Bankruptcy Protection Fund Ltd (to which I shall refer as “Protection”) or to Consolidated?
(2)	If the answer to (1) is Consolidated, is the agreement between it and Mrs Collins regulated or exempt for the purposes of the Act?
6.	Obviously, if the answer to (1) is Protection, Consolidated’s claim must fail. If the answer is Consolidated, it is common ground that the agreement did not comply with the requirements of the Act relating to regulated agreements. The present proceedings were issued by Consolidated without its having served default notices required in relation to regulated agreements by section 87 of the Act. If, therefore, the agreement was subject to the provisions of the Act and not exempt, Consolidated is not entitled in the present proceedings to enforce its claim or its security. The question whether the agreement was improperly executed (as to which see section 61 of the Act) was not before the Court. An improperly executed agreement is only enforceable if the Court makes an enforcement order under section 127 of the Act. 
7.	I have set out the issues at this early point in my judgment so that I can emphasise those parts of the relevant documents that particularly bear upon these issues. In all the extracts from the documents set out below, the italics have been added by me.
The facts 
8.	At the hearing of these appeals, the facts of the claim against Mr and Mrs Collins were treated as typical. I shall similarly confine my account of the facts to their case.
9.	Consolidated and Protection are associated companies, with the same directors. Their business model involves contacting persons who have been made bankrupt on a creditor’s petition. In the case of the Collins, it was Mrs Collins who had been made bankrupt, and who received a cold call from a representative of Protection. She and her husband are the joint owners of their home. In essence, the companies’ business involves offering to secure the annulment of the bankruptcy order by the advance of moneys on short-term loan, with substantial interest and fees payable by the debtor and the total of the moneys advanced, interest, fees and costs incurred in connection with the annulment secured on the property of the debtor. For this purpose, the equity of the debtor in the property to be charged must be sufficient to cover the ultimate indebtedness. If the debtor secures refinancing of the short-term indebtedness, it is repaid out of its proceeds. If not, and the debtor is unable to repay his or her liabilities to the companies, the security may be enforced.
10.	Mrs Collins had been made bankrupt on 22 May 2008 on the petition of her local authority, to which she owed the relatively modest sum of £4,384 on account of council tax. Her other creditors amounted to £9,160, so that the total sum subject to the bankruptcy was £13,544, plus statutory interest of just over £1,000. 
11.	The documents received by Mrs Collins included a leaflet of Protection. It  described in very negative terms the consequences of bankruptcy to the bankrupt, including:
“Your house will most likely be repossessed and the proceeds distributed amongst your creditors, with fees payable to the Official Receiver and Trustee.”
12.	Under the heading “What we do” and “Who are we?” it states:
“The Bankruptcy Protection Fund was set up to prevent people from losing their home as a result of bankruptcy. We do this by obtaining an annulment of the bankruptcy.”
The emphasis in this quotation and the others below is in the original. The leaflet continued:
“How can you help me?
We specialise in the annulment of bankruptcies. We operate a no win, no fee policy, and there are no upfront fees.
What will happen if you annul my bankruptcy?
•	You will be able to keep all your assets including your house and your car.
•	…
•	You will have no unsecured debts.
•	…”
13.	Under the heading “10 reasons you’ve made the right decision” are the statements:
“2. We have a 100% record in getting bankruptcies annulled.
4. We work for you, and not for your creditors.”
14.	The last page, headed “Frequently Asked Questions”, stated, among other things:
“We offer a full service from start to finish …
We have access to 3rd party funds that we can make available which can be used whilst you are bankrupt, i.e., your debts can be repaid prior to your annulment hearing. We then obtain an annulment which wipes off all traces of your bankruptcy. We also operate a No Win, No Fee policy with no upfront fees. …. If, and only if we are successful in getting your annulment, we charge a fee of £5350 plus VAT. …”
15.	Doubtless influenced by these positive statements, Mrs Collins agreed to Protection’s proposal for the annulment of her bankruptcy. The equity in her home was more than sufficient for the purposes of the proposed course of action. It is to be noted, however, that she was only one of the joint owners. She signed a letter dated 21 January 2009, prepared by Protection on its notepaper but addressed to it and to Lupton Fawcett (“LF”), the firm of solicitors habitually introduced by Protection, instructing them to take all necessary steps on her behalf to procure the annulment of her bankruptcy order.  Attached to the letter were terms and conditions. Condition 1 purported to confer on Protection the exclusive right for a period of 6 months to act on her behalf in connection with the annulment of her bankruptcy. Condition 4 was as follows:
“4. [Protection] will immediately hypothecate sufficient funds to pay off ALL your unsecured credit in full and repay as much of your registered charge(s) as they deem necessary to effect the annulment of the bankruptcy and the securing of the monies provided.
5. [Protection] may refer you to a mortgage broker who will use their best endeavours to arrange … a remortgage of your property for such amount as is required to pay off the full indebtedness to the third party funder, together with the amount outstanding on any charge on your property and costs incurred therewith.”
16.	Condition 7 stipulated a fee of £5,000 plus VAT for the services of Protection. Although described as a maximum, the judge was told that in practice it was never less. Condition 9 provided that it was to be payable only if Protection succeeded in securing the annulment of the bankruptcy order. Condition 10 was as follows:
“10. It is a condition of our acceptance of your instruction that you fully and unconditionally cooperate with all parties both pre and post annulment. In the event that you are judged to be non-compliant we reserve the right to treat this as a fundamental breach of these conditions which allows us to require repayment of such monies that have been advanced or incurred by you forthwith.”
17.	LF contacted Mrs Collins by letter dated 13 February 2009. It thanked her for her instructions to act on her behalf. It stated:
“We are one of a number of firms of solicitors to whom [Protection] from time to time refer individuals seeking to annul their bankruptcy with the benefit of funds advanced through [Protection].
Normally, in addition to acting for you, we will also act for [Consolidated] (a company associated with [Protection]) in arranging for their security (usually a charge over your home) to be completed and registered at H M Land Registry.
For the avoidance of doubt [Protection] do not receive any commission or other financial incentive from us to refer cases to us and it is not a condition of their lending that you instruct us. …”
18.	Under the heading “Work not covered”, LF’s letter stated that their work would not cover four areas of advice, of which the third was:
“Any advice on the terms of the proposed funding by [Protection] including any advice on the Loan Facility Letter or the security documents.”
19.	The letter reserved the right for LF to recalculate its charges:
“In the event: …
2. you fail to comply with Your Obligations to Us (as set out below) or terminate your instructions (except as a result of [Protection]’s refusal/failure to advance sufficient funds); … ”
20.	Under the heading “Billing Arrangements and Payment of Costs” the letter stated:
“Our Fixed Fee of £1,500 plus VAT and disbursements will only become due and payable upon your bankruptcy being annulled and will be paid from funds advanced by [Protection].”
21.	The LF documents were in standard form. The information in their documents as to who would be advancing moneys must have come from Protection or Consolidated or both, bearing in mind that they were habitually nominated by Protection to act for bankrupts. 
22.	The hearing of the application for the annulment of Mrs Collins’ bankruptcy was set for 21 May 2009. In connection with the application, LF sent to her their letter dated 17 February 2009 enclosing documents “which relate to the funds being advanced to you for the purpose of obtaining an annulment of your bankruptcy and are to be secured on your property”. The letter asked her to sign and return the documents to enable the application to proceed. The documents enclosed were:
(1)	A “Sterling Facility Letter” from Consolidated. I shall refer to it as “the Facility Letter”.
(2)	A third party legal charge over the Collins’ home.
(3)	A form of occupier’s consent to the charge.
(4)	A letter of authority addressed to LF.
(5)	A copy of the letter from LF to Innes Collins, Mrs Collins’ husband.
23.	The letter informed Mrs Collins that the Facility Letter set out the terms on which Consolidated was willing to advance funds to her. It reminded her that LF’s instructions did not include advising her on the appropriateness or the nature and effect of the loan from Consolidated or the charge. It stated: “if at any stage you require such advice you should seek independent legal advice from another solicitor or from someone authorised to give such advice by the Financial Services Authority.”
24.	The letter to Mr Collins enclosed copies of the documents sent to his wife and stated:
“We strongly recommend that you contact an independent solicitor to seek your own legal advice concerning the legal effect of the Legal Charge.”
25.	The charge, if executed, in addition to creating security over Mr Collins’ interest in the property, imposed on Mr Collins personal liability for his wife’s indebtedness to Consolidated. He did not have any liability for the debts of his wife in her bankruptcy. 
26.	The Facility Letter confirmed that Consolidated had agreed to make available a term loan of £32,000 to Mrs Collins. This was the sum then estimated to be required to be paid to secure the annulment of the bankruptcy. Clause 2.1 provided that the Loan was to be used for the purposes of refinancing the Debt. “Debt” was defined in clause 1.1 as “the aggregate principal sum of £32,000 plus interest accrued thereon”. Clause 6.1 required the Borrower (i.e., Mrs Collins) to provide among other things “evidence satisfactory to [Consolidated] that there will be sufficient equity of redemption in the Property as at the Drawdown Date to ensure repayment in full of the Loan and all other moneys payable under the terms of this letter …” Clause 7 provided for interest on the loan to be charged at the rate of 2.5% per month or part thereof, and at 3% per month if the term of the loan was extended. Clause 7.4 increased the interest rate to 4 per cent per month if the Loan was not repaid in full within 3 months of the drawdown. All the interest was stated to be compound, with monthly rests. In addition, there was a so-called hypothecation fee of 2.5% (with a minimum of £1,500) of the principal amount of the Loan which would be deducted from the Loan on drawdown. There was also an exit fee of whichever was the greater of £3,000 and 2.5% of the principal amount of the loan. Clause 8 required the Borrower to repay the Loan with all accrued interest and the fee and any other sums payable under the Facility Letter on a date three months after drawdown.
27.	The letter of authority addressed to LF was as follows:
“Please accept this letter as my irrevocable authority and instructions for you to carry out the following on my behalf:
1.	To hold to my order the signed Sterling Facility Letter and signed and witnessed Third Party Legal Charge pending drawdown of funds from [Consolidated].
2.	Once the debts and expenses of my bankruptcy have been paid, to proceed with my application for annulment and for you to sign a second witness statement on my behalf if for some reason I am unable to do so.
3.	Immediately following the annulment order, to complete the Sterling Facility Letter and Third Party Legal Charge by dating those documents the day of the annulment order and delivering copies of them to Consolidated Finance Limited.
4.	Within seven days of the annulment order to apply to register the Third Party Legal Charge on behalf of [Consolidated].”
28.	Mrs Collins and her husband duly signed and executed the documents LF had sent to them and returned them to LF. Mr Collins did not take independent  legal advice.
29.	A solicitor at LF made a witness statement in support of her annulment application. It included the following paragraph:
“I am informed by [Protection] that they have provisionally agreed to advance sufficient funds to enable the Applicant’s creditors to be paid in full with statutory interest and to enable the costs and expenses of her bankruptcy to be paid in full or secured to the satisfaction of the Court. It is proposed that all debts costs and expenses are paid in full before the hearing of the application.”
30.	On 19 May 2009 Consolidated’s bank account was debited with the sum of £24,673.83 and Protection’s bank account was credited with the same sum. This was the sum required to discharge the sums due in Mrs Collins’ bankruptcy, but it did not include the fees of LF or the disbursements made by Protection or Protection’s fee. No internal documentation of either Consolidated or Protection has been disclosed relating to this transfer.
31.	On or about 20 May 2009 Protection paid to Mrs Collins’ creditors in her bankruptcy the sums due to them, including statutory interest, so as to secure the annulment. For the purposes of the determination of the preliminary issues in these proceedings it was assumed that, as pleaded by Consolidated, in making these payments Protection did not act as agent for Consolidated.
32.	On 21 May 2009 the application for the annulment of the bankruptcy was successful. Following the making of the annulment order, LF carried out Mrs Collins’ instructions as set out in paragraphs 3 and 4 of the letter of authority. 
33.	Mr and Mrs Collins were unable to refinance their liabilities under the Facility Letter and the Legal Charge. As a result, Consolidated filed the present claim against them. As at 30 September 2011, the total claimed by Consolidated was £77,384.89, which included so-called bridging interest at 4 per cent per month to that date.  The Court was not given an up-to-date figure, but it must by now exceed £100,000.
The statutory provisions
34.	It is common ground that the agreement between Consolidated and Mrs Collins, contained in the Facility Letter, is a consumer credit agreement within the meaning of section 8 of the Act “an agreement between an individual (“the debtor”) and any other person (“the creditor”) by which the creditor provides the debtor with credit of any amount”. Section 8(3) provides that such an agreement is a regulated agreement within the meaning of the Act unless it is an exempt agreement specified in or under sections 16, 16A, 16B or 16C.  It is common ground that if the agreement between Mrs Collins and Consolidated was regulated, it did not comply with the statutory requirements applicable to such agreements and is unenforceable in the present proceedings. On the other hand, if it was an exempt agreement, non-compliance with the statutory requirements does not arise and it is enforceable.
35.	For this purpose, the crucial statutory provision to be considered is section 11. It is as follows:
11  Restricted-use credit and unrestricted-use credit
(1)     A restricted-use credit agreement is a regulated consumer credit agreement--
(a)     to finance a transaction between the debtor and the creditor, whether forming part of that agreement or not, or
(b)     to finance a transaction between the debtor and a person (the “supplier”) other than the creditor, or
(c)     to refinance any existing indebtedness of the debtor’s, whether to the creditor or another person,
and “restricted-use credit” shall be construed accordingly.
(2)     An unrestricted-use credit agreement is a regulated consumer credit agreement not falling within subsection (1), and “unrestricted-use credit” shall be construed accordingly.
(3)     An agreement does not fall within subsection (1) if the credit is in fact provided in such a way as to leave the debtor free to use it as he chooses, even though certain uses would contravene that or any other agreement.
(4)     An agreement may fall within subsection (1)(b) although the identity of the supplier is unknown at the time the agreement is made.
36.	Consolidated’s case is that the agreement contained in the Facility Letter on its true construction is a restricted-use agreement within section 11(1)(b) (which, as explained below, raises the key issue on this appeal), that, in consequence,  it was also a debtor-creditor-supplier agreement under section 12(b), and  that it was thus exempted by Article 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989.  Section 12(b), so far as is relevant,  refers back to section 11(1): it provides:
“A debtor-creditor-supplier agreement is a regulated consumer credit agreement being— 
(a) …
(b) a restricted-use credit agreement which falls within section 11(1)(b) and is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier, or 
(c) …”
37.	Article 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989, made under the powers conferred on the Secretary of State by the Act, exempts certain debtor-creditor-supplier agreements from regulation. Consolidated contends that its agreement with Mrs Collins was such an agreement, namely “an agreement for fixed-sum credit under which the total number of payments to be made by the debtor does not exceed four, and those payments are required to be made within a period not exceeding 12 months beginning with the date of the agreement; ...”
Discussion 
38.	It can be seen that the first step is to determine whether, as Consolidated contends, its agreement was an agreement to finance a transaction between Mrs Collins and a person other than Consolidated (section 11(1)(b)) or an agreement to refinance any existing indebtedness of the debtor (section 11(1)(c)). 
39.	Consolidated contends that the transaction in question was the agreement whereby Protection undertook to secure the annulment of Mrs Collins’ bankruptcy. Protection provided a package service, including introducing LF, and was entitled to be paid for that service. The case for Mr and Mrs Collins is that if Consolidated is the Collins’ creditor (which is disputed), and if the agreement with Consolidated was a restricted use agreement (which is also disputed), it was a refinancing agreement within section 11(1)(c). It is common ground that if it was a refinancing agreement within that paragraph, it could not be an exempt agreement.
40.	The first question to be addressed is whether the agreement was a restricted use agreement. It can only be such an agreement if the debtor contractually agreed that the credit in question was to be used only for the use in question: National Westminster Bank v Storey [1999] CCLR 70. For this purpose, Consolidated relies on paragraph 2.1 of the Facility Letter.
41.	Mr Cawson QC, for Consolidated, accepted that the restriction in paragraph 2.1 if literally construed was meaningless, because the definition in clause 1 rendered it circular. However, he submitted that the Court should seek to place meaning on clause 2.1, and that it is evident that the Loan was to be used to pay for the services provided by Protection.
42.	At this point Mr Cawson faces the difficulty of the judgment of Arden LJ, with which the other members of the Court agreed, in Consolidated Finance Ltd v McCluskey [2012] EWCA Civ 1325. That case concerned a materially identical agreement to the Facility Letter relied upon in this case. Counsel for Consolidated conceded that clause 2.1 was meaningless, but submitted that a restriction satisfying the requirements of section 11(1) was to be implied. In her judgment, Arden LJ referred to the most helpful authorities on the implication of contractual terms, including Attorney General of Belize v Belize Telecom [2009] 1 WLR 1988, BP Refinery v Shire of Hastings (1977) 180 CLR 266 and her own judgment in Stena Line v Merchant Navy Ratings Pensions Fund [2011] EWCA Civ 543, and applied them. She concluded that no such restriction was to be implied. With that judgment, on the issue of the implication of a restriction, I respectfully entirely agree.
43.	However, Mr Cawson put the case before us differently. He submitted that what the Court is required to do is to consider what meaning the parties must have attached to clause 2.1 of the Facility Letter, having regard to their antecedent communications and their knowledge of what their agreement was intended to achieve. This is different from the implication of a contractual term, there being no need, for example, to show that the alleged term is required to render the contract workable. He relied, in particular, on the judgment of Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101. 
44.	Clearly, this is a case, like Chartbrook, in which the language of the contract in question has gone wrong. The express definition of the Loan is meaningless and must be disregarded. I agree that clause 2.1 indicates that the parties agreed that the Loan was to be used for a particular purpose only. I am prepared to accept for the purpose of this appeal that this purpose was to pay sums to Protection in connection with the annulment of the bankruptcy and to LF, whose documents stated that they were to be paid out of moneys advanced: in other words, to pay for what had been incurred for the purpose of the annulment of the bankruptcy. However, it is necessary in any event to identify what was due to Protection and when. 
45.	Unless and until the annulment order was made, the Facility Letter and the Legal Charge were of no effect: they were held by LF to the order of Mrs Collins. Protection had already paid Mrs Collins’ creditors and the other sums required to be paid in order to secure the annulment. It did so at her request, express or implied, and as a result she became liable to repay to it the sums it advanced. 
46.	The preponderance of the documents provided to Mrs Collins apart from those enclosed with LF’s letter of 17 February 2009 led her to believe that her creditors would be paid off by Protection. The reference to access to third party funds in Protection’s leaflet referred to at paragraph 14 above indicates, and is certainly consistent with, the expectation that it is to obtain funds from a third party and make them available for the bankrupt. The statement in Protection’s terms and conditions that it would hypothecate funds implied that it had control of those funds, even if the use of the word “hypothecate” was strictly inapt. It clearly followed from condition 10 that Protection was to advance moneys to Mrs Collins. LF’s letter of 13 February 2009 referred in clear terms to the proposed lending by Protection. The solicitor’s witness statement referred to at paragraph 29 above was unequivocal. When I add to these statements the fact that it was Protection that made the payments to Mrs Collins’ creditors, I am driven to the conclusion that these sums were advanced by Protection, and that Mrs Collins understood and agreed that it would do so.
47.	Mrs Collins was indebted to Protection in relation to the sums it had advanced certainly until the annulment order was made and the Facility Letter and the Legal Charge delivered to Consolidated. Similarly, when the annulment order was made, she became immediately liable to pay to Protection its fee. The effect of the Facility Letter was to replace her indebtedness to Protection, which was then payable, with that owed to Consolidated. In other words, the purpose of the agreement between Mrs Collins and Consolidated was to refinance her indebtedness to Protection. The use of the word “refinance” in clause 2.1 of the Facility Letter was entirely apt, but it only confirms what I would in any event hold to be the effect of the transactions in question.
48.	Mr Cawson submitted that this analysis is inconsistent with the provisions of section 285 of the Insolvency Act 1986. In his skeleton argument, he contended that since by section 285(3)(a) of that Act, no creditor of the bankrupt in respect of a debt provable in the bankruptcy shall “have any remedy against the person or property of the bankrupt in respect of that debt” “it is difficult to see how anything could properly have been said to have been lent by anybody to the bankrupt Appellants”. However, section 285 is irrelevant. It applies only to debts provable in Mrs Collins’ bankruptcy. Her liabilities to Protection were incurred after her bankruptcy order, and were not provable in her bankruptcy: see section 382 of the Insolvency Act 1986 and rule 12.3 of the Insolvency Rules 1986. Moreover, section 285 does not prevent a debt from coming into existence, as the reference to “that debt” makes clear. The section affects enforcement, but does not preclude the incurring by the bankrupt of the underlying liability. Section 360 makes it a criminal offence for an undischarged bankrupt to incur credit in excess of a prescribed amount (£500) without disclosing that she is such; but of course Protection knew full well that Mrs Collins was an undischarged bankrupt, indeed it was because she was such that it contacted her. It too is irrelevant to the issues on this appeal.
49.	Section 11 draws a distinction between the financing of a transaction and the refinancing of an existing indebtedness. If a transaction under which money is to be earned by a creditor and paid by a consumer has been completed so as to create an indebtedness on the part of the consumer, at that point any third party financing to be used to satisfy that indebtedness is to refinance that indebtedness. On the other hand, if the transaction has not yet taken place, a restricted-use credit agreement will be one to finance the transaction.
50.	Here, when, on the making of the annulment order Protection’s services were complete, it was entitled to be paid. Consolidated then received the Facility Letter and the Legal Charge and Mrs and Mr Collins became bound by them. On its true construction the purpose of the Facility Letter was to refinance Mrs Collins’ indebtedness to Protection (and her indebtedness to LF). “Loan”, the word used in the Facility Letter, and “indebtedness”, the word in section 11(1)(c), are for present purposes synonymous. It follows that the agreement between Consolidated and Mrs Collins was an agreement within section 11(1)(c). It was not an agreement within section 11(1)(b) and was not an exempt agreement, but a regulated agreement, and in consequence of the failure to comply with the statutory requirements under the Act it and the Legal Charge are unenforceable in the present proceedings.
51.	In my judgment, the judge failed to analyse correctly the liabilities of Mrs Collins before the annulment order was made and on its being made. There was indeed a Loan at that point of time and it was refinanced under the agreement contained in the Facility Letter and the Legal Charges. 
52.	For the reasons I have given, I would allow the appeal. My answer to the first preliminary issue appears from my judgment. My answer to the second preliminary issue is that each of the agreements between Consolidated and the debtors under those agreements was regulated. They therefore cannot be enforced in the present proceedings. Whether they can be enforced in subsequent proceedings will require service of default notices and, since it seems that the agreements were not properly executed within the meaning of Part V of the Act, will depend on whether the County Court makes an enforcement  orders under section 127. 
53.	I should add that in her helpful written submissions on behalf of the OFT, Miss Smith submitted that even if the advances made by Consolidated were only in part subject to a contractual requirement that they be used for a particular purpose, by virtue of section 18 of the Act the entire agreement between it and Mrs Collins fell to be treated as regulated by virtue of section 11(1)(c), and therefore unenforceable. I have not felt it necessary to address this submission, which was not advanced by the Appellants. Miss Smith also submitted that, if there was no indebtedness due to Protection from Mrs Collins, at least in part, the Facility Letter should be construed as including an agreement that the advances be used to refinance the bankruptcy debts of Mrs Collins due to unconnected third parties. Again, I do not consider it necessary to address this submission, while appreciating its force.
54.	If Lady Justice Arden and Lord Justice Sullivan agree with my conclusions, the parties should seek to agree the orders to be made by the Court in consequence of our judgments.
Other matters
55.	I have to say that I am concerned at the unfairness of the transactions between Mr and Mrs Collins and Protection and Consolidated. For this purpose, I think it sensible to treat the two companies as one business, as in reality they are. 
56.	At least in the case of Mr and Mrs Collins, the transactions were in my judgment manifestly to their prejudice. They were vulnerable consumers, worried about the possible loss of their home by reason of her bankruptcy. If they could not refinance the relatively modest sum due to their petitioning creditor, or even the total of her bankruptcy debts (and clearly they had been unable to so so), the chances were that she would be unable to refinance the much greater sums that would, apart from the effect of the Act, be due to the companies, as indeed has happened. If they failed to refinance their liabilities to the companies, as has happened, and the Legal Charges granted to Consolidated were enforceable, it would not only be Mrs Collins’ equity in their home that would be in peril, but also that of Mr Collins. In other words, they were likely to lose their home. This was the very result that, according to the companies’ literature, entering into agreements with them would avoid, but with the added prejudice that the far greater sums sought by the companies would have to be paid out of the proceeds of sale of their home as against the sums due in the bankruptcy (for which Mr Collins had no liability).
57.	In reality, Protection and Consolidated incur no risk in making an advance to the bankrupt, since they will do so only if the bankrupt has a property the equity in which is sufficient to secure the payments they make and their charges for their services and finance. Once they are so satisfied, and agree to pay off the bankrupt’s liabilities, it is virtually certain that the bankruptcy will be annulled. It is scarcely surprising that they are able to claim 100 per cent success. To suggest that they take any relevant risk, as they do by describing their services as “No win no fee”, is misleading. The charges made by the Companies are not consistent with the lack of any real risk on their part. 
58.	Moreover, the companies’ advance literature, such as the leaflet of Protection to which I have referred, make no mention of the extraordinarily high rates of interest they charge, rates that are even more striking given that the indebtedness is fully secured.
59.	Finally, I am concerned at the part played by the solicitors. They were not represented before us, and so I can only express my concerns, but I do not come to any conclusion. LF were well aware of the standard terms of the agreements sought by the companies. It must, and certainly should, have been obvious to them that for the reasons I have given the transactions with Mr and Mrs Collins were manifestly to their disadvantage. Mrs Collins was their client. I raise the question whether in such circumstances a solicitor can properly avoid a duty to advise his client by excluding that duty from his retainer, as LF sought to do. Did LF permit their client to enter into transactions that, it seems to me, they must have appreciated were to her disadvantage? At the very least I think that they should have advised Mrs Collins in the strongest terms to seek advice elsewhere. Instead, their client letter merely pointed out that she was free to seek advice elsewhere. I am not confident that this would be sufficient, however. One should bear in mind that someone in her situation may in practice be unable to afford to consult another independent solicitor. It may well be that, given their on-going relationship with the companies that habitually introduced work to them, they had a conflict of irreconcilable interests. 
Lord Justice Sullivan:
60.	I agree.
Lady Justice Arden:
61.	I also agree.