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Court of Appeal hands down judgment in Al Tamimi v Khodari

On 8 October 2009, the Court of Appeal handed down its judgment in Al Tamimi v Khodari [2009] EWCA Civ 1042. Neil Mendoza appeared for the successful Respondent.

In this case, the claimant banker (K) claimed repayment of the balance of a number of loans made to the defendant businessman (T). T counterclaimed for an account of the loan transactions going back some six years. T had an account with a bank where K worked. According to K, his relationship with T consisted of him personally lending money to T for gambling at his request when he needed it, typically out of banking hours, and at short notice. T maintained that he seldom called K asking him for money; rather K was continually forcing money on him. Over the years T borrowed substantial sums from K, who imposed a 10 per cent charge on the loans. At one point T repaid all monies owed. K claimed that the loans to T were later resumed but eventually the parties' relationship of trust broke down. There were no proper records and T was never asked to sign anything. The outstanding amount sought by K was £240,500. T disputed the claim to the 10 per cent charge on the loans. K submitted that each transaction was a separate self-contained loan agreement which, by virtue of the course of dealing between the parties, carried with it an implied term that repayment would be made with an additional 10 per cent. T argued that he had been induced to pay K the additional 10 per cent on the latter's representation that he was incurring 5 per cent in his own borrowing costs, which was untrue.

The trial judge (Blair J) entered judgment for K in the sum of £240,500 plus interest, and dismissed T’s counterclaim. T appealed on the grounds that, inter alia, of the sum of £240,500 for which the judge gave judgment, £202,000 was irrecoverable by virtue of Section 1 of the Gaming Act 1892.

Dismissing the T’s appeal, the Court of Appeal approved the principle stated by Denning LJ in MacDonald v Green [1951] 1 KB 594 at 605-6, namely that: a loan which leaves the borrower at liberty to apply the money as he wishes, is not invalidated by the Gaming Act, 1892, even though it is contemplated by both parties that he will probably pay betting debts with it; but when a loan is hampered by a stipulation that the money is to be used for payment of a betting debt, then no matter whether the stipulation is express or implied or to be inferred from the circumstances, the loan is a payment is respect of the betting debt and is hit by the Act