EWCA Civ 1466;  1 WLR 685.
The loan agreement contained a clause entitling the lender to increase the interest rate during the period of the mortgage. The CA held that this clause was subject to an implied term that the discretion to vary the rates was not to be exercised dishonestly, for an improper purpose, capriciously, arbitrarily or in a way which no reasonable mortgagee, acting reasonably would do. On the facts there was no breach of the implied term.
Further, the extortionate credit provisions of the Consumer Credit Act 1974 could not apply because the time for determining whether or not the credit bargain was extortionate was at the outset before the variations had taken place.