Lendy Borrower fails to find Mr Mohammed at High Court

A Lendy borrower who saw her £300,000 debt spiral to £3.7m has lost her case at the High Court.

Lendy Ltd was a so-called peer-to-peer lending company which facilitated the crowd funding of loans by members of the public secured against property and other assets. It was placed into administration following action by the FCA in 2019.

One such asset was formally “the gatehouse to Stoke Park, a former country mansion which is now one of the most prestigious hotels and golf clubs in Buckinghamshire” and “has been altered, extended and adapted to create a modern contemporary 4 / 5 bedroom house which has been finished to a very high standard.”

In August 2016 a loan of some £1.25m, understood to have been collectively financed by 1,246 members of the public, was advanced to Ms Petra Omoruyi, 41, of Bromley. The loan was facilitated by Lendy acting as agent on behalf of the investors and was secured against the property in Stoke Park.

Following default of the loan the property was sold at auction by receivers for £1m leaving a balance of circa £300k.  This amount attracted an interest rate of 4.4% per month, which after compounding, had grown to a whopping £3,726,138.54 at the date of the trial.

The matter had previously been listed for trial in October 2021 but was adjourned after Ms Omoruyi’s solicitor had failed to obtain counsel.

The court was told that due to a lack of funds the defendants solicitors had ceased to act the previous week and so Ms Omoruyi appeared unrepresented.  Initially her 12-year-old son was denied entry into the court by the usher who cited court rules.  After six-minutes of waiting, alone and unsupervised in the corridor outside he was invited in after the Judge had been consulted.

The claimants, Lendy Limited and Saving Stream Security Holding Limited, both linked companies, were represented by barrister Lloyd Maynard instructed by Shoosmiths.

Judge Richard Smith (Sitting as a Deputy Judge of the High Court) explained that there was “no dispute she entered into these agreements and drew down the full amount of these loans”.  What was in issue was the role of a man, referred to as Mr Mohammed, in the setting up of the loan agreements.

It was Ms Omoruyi’s case that a Mr Mohammed Qadeer, said to be a friend of a neighbour, spoke with Ms Omoruyi at his office in East London.  It is claimed that Mr Qadeer said he had “a longstanding relationship with Lendy” and as far as Ms Omoruyi was concerned “this man was completely the face of Lendy”.

It was during this meeting that Ms Omoruyi claimed she “was promised heaven and earth” in relation to furthering her investment portfolio by obtaining a loan from Lendy.  The potential profit from flipping the Stoke Park property was in the region of £700k.

Ms Omoruyi apparently told him that she was in receipt of benefits and unemployed.  “How am I going to pay it back? Don’t worry we’ll look after that… We’ll sell it for you.  You don’t need to do anything” is how she says the conversation went.

It is said Mr Qadeer arranged for the initial deposit for Gateside Lodge to be funded by re-mortgaging her main residence and two buy-to-let properties.  The court heard that these properties had been financed by Ms Omoruyi’s ex-partner to ensure that the family still had income coming in due to his absence.

“After the property was unable to be sold Mohammed disappeared from the scene” she explained.  Unfortunately, the problems continued – the property was found to be riddled with ‘critical rising damp’ and was sold at auction for less than the outstanding loan.  The amount due has now ballooned to some £3.7m.  “This has been a disaster for my family…My mother passed away last year because of this matter”.  She said Lendy were “criminals who are wearing ties and jackets and shirts…I believe they are loan sharks, manipulating innocent people. … they became very nasty.” No evidence was provided for this assertion.

The court heard testimony from Mr William Beach, a consultant at RSM Restructuring, the firm whose members are appointed as the joint administrators of Lendy.  Mr Beach explained that his knowledge of the company pre-administration was limited but RSM had carried out a thorough review of the companies records and “we can find no record of Lendy or Savingstream ever having an employee called Mr Mohammed.“

The court also heard live evidence from Mr Alan Darling, who was formally Head of Lending and subsequently Lendy’s Recoveries Manager.  He explained he had never heard of a Mr Mohammed either. 

Mr Darling was asked if he was aware properties were overvalued – “No, I’m not aware of that” he replied, adding “at the time we would not lend money if we didn’t believe the valuation was correct.”

Mr Darling told the court “I’m not aware of giving anyone false hope” when asked if borrowers were misled with prospects over ease of repayment.

In any event the two counterclaims made by Ms Omoruyi appear to have been misfounded.  The Judge ruled that in respect of the alleged misrepresentations “any recourse should be made against Mr Mohammed not Lendy”.  In response to the allegation that the property was sold at an undervalue by the receivers the court ruled that Lendy “cannot be held responsible for their conduct”.

The Judge said of Ms Omoruyi that “despite her understandable unfamiliarity” with the process “I found the defendant courteous and respectful to the court”.  However, he said he “found unimpressive the defendants excuses for failing to provide key documents” including conveyancing files which may have assisted with corroborating the existence of Mr Mohammed.  “Likewise the fact she has not disclosed any documents including electronic records is also unsatisfactory”.

Finding wholly for the claimants the court granted judgment for the outstanding capital, accrued interest, the receivers costs & expenses and Lendy’s ‘Exit Fee’ of £25k.

On the subject of Lendy’s legal bill of £111,230 Ms Omoruyi said “I see no reason why I should pay anything and secondly, I have no money to pay.  I feel I have been unfairly treated.“

The Judge disagreed stating “it seems to me the claimants should have their costs of these proceedings as they are the successful party“.  Citing “significant failure on the defendants part to co-operate” including the “failure to disclose obviously relevant documents” the court ruled that costs should be paid on an indemnity basis.

Upon being told that Lendy wished her to pay 65% of their costs as an interim payment Ms Omoruyi responded “I have no money.  Nothing is left.  I’m a carer” before shrugging her shoulders.

In final consideration the judge said that her impecuniosity “is a matter which I do have regard” before adding “I am sure that the claimants will be only too aware of the risks of them, particularly as both companies are in administration, of throwing good money after bad.”  The court ordered that £72,000 should be paid within 21 days.

It’s unclear how much of the debt Lendy will ultimately recover.

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Case Details
In the High Courts of Justice
Queen’s Bench Division
Before Richard Smith (Sitting as a Deputy Judge of the High Court)
QB-2020-004345 Lendy Limited and another v Omoruyi
7th and 8th March 2022 – Court 11 RCJ