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Lawyer seeking funds to contest mortgage ruling

Paragon Group is claiming victory in a Court of Appeal test case which lenders feared would restrict their ability to set variable rates at random.

However, London-based lawyer Joseph Aaron, who acted on behalf of the borrowers of Paragon subsidiary National Home Loans who took the lender to court, is disputing the victory and claims the judgement remains ambiguous.

The borrowers took legal action after the lender refused to reduce the high variable rates they were paying, even though they were up to 70 per cent more than average industry trends.

The court – which admitted its judgment failed to represent the hardship of the borrowers – ruled that interest rates cannot be set “dishonestly, for an improper purpose, capriciously, arbitrarily or unreasonably”.

Aaron claims the ruling is a “partial victory” but plans to challenge the decision in the House of Lords as he believes it does not go far enough. He is setting up a legal fund to help his clients contest the ruling and is urging other borrowers in a similar position to make donations.

If successful, Aaron claims the case would benefit all borrowers on disproportionate rates who took out loans before 1994.

He says: “The Court of App-eal was wrong not to go further and now we have to try and take this important case to the House of Lords. But without the help of other borrowers in a similar position, it will be too expensive for my clients to pursue the matter further.”

Paragon Group executive director (operations) Neale Burgess says: “It is important to understand this merely endorses an earlier decision by the lower courts and we were always confident as to the outcome of the case.”

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