Borrower may arguably sue lender for undrawn tranches as agreed sum

A borrower suing a lender for money promised but never advanced is not automatically confined to damages. Whether the so-called No Debt Claim Rule bars an agreed-sum or specific-performance claim depends on the scope of a rule whose rationale and limits are uncertainNationalarchives, and a bespoke facility with settlement features and hard-to-quantify benefits is arguably outside itNationalarchives, so the claim should go to trialNationalarchives.

Standard Gas agreed a £1,500,000 shareholder loan facilityNationalarchives with Mr Goodwin in September 2025, to be advanced in three £500,000 tranchesNationalarchives in October, November and December 2025 for working capital and a pyrolysis plant project. Only the first tranche, paid late, arrived; £1,000,000 remains outstandingNationalarchives, and non-payment is undisputed. In exchange, Standard Gas suspended pursuit of an estimated £2,169,056 of claims against the project contractor, a company over which Mr Goodwin had significant influence. Repayment was conditional on the plant passing acceptance tests and a fresh £5,000,000 fundraising, with a fallback allowing Standard Gas to assign the contractor claims to Mr Goodwin instead of repaying in cash. No interest accrued absent default.

Mr Goodwin sought strike-out and reverse summary judgment of the £1,000,000 claim, leaving a recast damages claim to proceed. His case was that a debt claim against a lender who fails to lend is barred in substance as specific performance of a loan contract, on the authority of South African Territories v Wallington, that the agreement was an ordinary loan, that it was no compromise since it extinguished nothing, and that damages were plainly adequate because Standard Gas had raised some £2,000,000 through a rights issue instead.

The court disagreed that the point could be decided summarilyNationalarchives. Wallington itself contains no real analysis of the ruleNationalarchives, predates Beswick v Beswick's recognition that money obligations can be specifically performed, and leaves open whether the bar is a blanket prohibition on debt claims or only reflects the usual unavailability of specific performanceNationalarchives. The Privy Council in Loan Investment v Bonner treated the objection as one of principle that may not prevail in exceptional cases, and commentators have increasingly questioned an absolute rule where substitute funds are unobtainable or damages are hard to prove.

This facility was arguably no ordinary loanNationalarchives. Its commercial purpose included keeping Mr Goodwin, who could influence the troubled project, bound into its completion; the package of forbearance, conditional repayment and claim-assignment rights could not simply be bought in the marketNationalarchives; and delay losses on a live project are potentially speculative and difficult to quantifyNationalarchives. Alternative funding did not replicate those benefits. Characterisation and adequacy of damages were therefore fact-sensitive questions for trial in an undeveloped area of lawNationalarchives. The argument that a parallel damages trial made summary disposal pointless was rejected on its own, but the opposed amendments, including the agreed-sum and specific-performance claims, were allowedNationalarchives, with Standard Gas paying the costs they occasioned.

Legal basis: South African Territories v Wallington, Loan Investment v Bonner and Beswick v Beswick, under CPR Parts 3, 17 and 24.