Appeal From Aberdeen Sheriff Court Richard Durkin V. Dsg Retail Limited+hfc Bank Plc
| Jurisdiction | Scotland |
| Judge | Lord President,Lord Eassie,Lord Mackay of Drumadoon |
| Date | 15 June 2010 |
| Court | Court of Session |
| Published date | 15 June 2010 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lord Eassie Lord Mackay of Drumadoon . | [2010] CSIH OPINION OF THE COURT delivered by LORD MACKAY OF DRUMADOON in the cause by RICHARD DURKIN Pursuer and Appellant; against DSG RETAIL LIMITED First Defenders and Respondents: and HFC BANK PLC Second Defenders and Respondents; _______ |
AppellantAct: Paterson, Solicitor Advocate, and McLean, Solicitor Advocate; Tods Murray LLP (Appellant)
First RespondentsAlt: Dawson; Peterkins (First Respondents)
Second RespondentsAlt: Clark, Q.C. and , McShane; Andersons LLP for Patten & Prentice (Second Respondents)
[Date of Issue]15 June 2010
Introduction
[1] The pursuer and appellant ("the appellant") raised an action for declarator and reparation against the first and second defenders and respondents in Aberdeen Sheriff Court. The action relates to a contract of sale between the appellant and the first defenders and respondents ("the first respondents") and a credit agreement between the appellant and the second defenders and respondents ("the second respondents"). After proof, and by interlocutor dated 26 March 2008, the sheriff pronounced decree of declarator against each of the respondents and decree for payment of damages against the second respondents. The appellant has appealed and the second respondents have cross appealed against that interlocutor of 26 March 2008. The appeal and cross appeal raise a number of issues, including a question of law as to the construction of section 75(1) of the Consumer Credit Act 1974 ("the 1974 Act").
Background
[2] The appellant is an off-shore construction surveyor. Throughout the material time, between 1998 and the proof, which was heard on a number of dates between February and June 2007, the appellant owned a house in Aberdeen. During 1998 and 1999 he lived in that house when he was not working off-shore. Thereafter, when not off-shore, he lived partly in Aberdeen and partly in rented accommodation in Spain.
[3] The first respondents trade under the name of PC World and specialise in the sale of computers and associated equipment. On 28 December 1998 they did so from retail premises in Aberdeen. The second respondents are a bank, which in December 1998 provided credit facilities to consumers purchasing computers from the first respondents.
[4] On 28 December 1998, the appellant visited the retail premises of the first respondents in Aberdeen. He wanted to purchase a laptop computer with an inbuilt modem. Whilst the appellant was at the first respondents' premises, Robert Slorance, an employee of the first respondents, identified a Hitachi laptop computer as meeting the appellant's requirements. The laptop was in a sealed box. Mr Slorance was not permitted to open the box and allow the appellant to examine the laptop. For that reason it was not possible to check whether the laptop had an inbuilt modem. However, Mr Slorance suggested to the appellant that he should buy the laptop and indicated that if, on taking the laptop home, the appellant ascertained it did not have an inbuilt modem, he could return it. The appellant decided to purchase the laptop. He did so on the understanding that if it transpired that the laptop did not have an inbuilt modem, he could return the laptop to the first respondents and rescind the bargain.
[5] On 28 December 1998, the appellant paid the first respondents £50 towards the purchase price under the contract of sale. He also signed a consumer credit agreement with the second defenders for £1449 ("the credit agreement"), to cover the balance of the purchase price of the laptop. Mr Slorance, the first respondents' employee, dealt with the paperwork relating to the credit agreement on behalf of the second respondents. That paperwork, although signed by the appellant on 28 December 1998, was not completed by the first respondents on behalf of the second respondents until the following day and was dated 29 December 1998.
[6] When the appellant got home on 28 December 1998, he discovered that the laptop did not have an inbuilt modem. At 9 am the following morning the appellant returned to the first respondents' premises in Aberdeen. He rejected the laptop as being disconform to contract and he rescinded his contract of sale with the first respondents. He sought repayment of the £50 he had paid and cancellation of the credit agreement with the second respondents. On that occasion the appellant dealt with Andrew Taylor, another employee of the first respondents. Mr Taylor refused to accept the appellant's rejection of the laptop, to repay £50 to the appellant or to take any steps to cancel the credit agreement. The appellant left the laptop with the first respondents and left their premises.
[7] The appellant then went to work off-shore. On his return to Aberdeen, approximately two weeks later, he discovered that the first respondents had delivered the laptop to his house in Aberdeen. The appellant again returned the laptop to the first respondents' premises, where it remained. The appellant subsequently sought repayment of £50 from the first respondents. They failed to repay that sum until sued by the appellant in a small claims action. On repayment of that sum by the first respondents the small claims action was settled and dismissed.
[8] The appellant made no payments to the second respondents in respect of the credit agreement. In or about March 1999, following a request for payment from the second respondents, the appellant telephoned them. He advised the second respondents that he had rejected the laptop and had returned it to the first respondents, because it did not conform to his contract of sale. He informed the second respondents that because he had rejected and returned the laptop he was not going to make any payments to them under the credit agreement.
[9] The second respondents insisted on the appellant making payments in terms of the credit agreement. By letter dated 22 July 1999, they advised the appellant of the possible consequences if he failed to do so. They indicated that on a monthly basis they reported to national credit reference agencies on the status of customer accounts. They suggested that might lead to his having difficulty in the future in obtaining a mortgage or other credit. The second respondents subsequently served a default notice on the appellant, in terms of the provisions of section 87(1) of the 1974 Act, and caused entries to be made in the registers of Experian Limited and Equifax Limited, the two largest credit reference agencies in the United Kingdom. Those entries were to the effect that the appellant was in default to the extent of £1499 (sic) in his obligations to the second respondents under a fixed term loan from the second respondents.
[10] Following the appearance of those entries in the registers of the credit reference agencies, the appellant repeatedly telephoned the second defenders and sought to persuade them to remove the adverse entries. The second defenders refused to do so. They made no enquiries into the appellant's claim that he had been entitled to and had in fact rescinded his contract of sale with the first respondents.
[11] Although the appellant registered notices of correction with Experian and Equifax, explaining that the second respondents' entries related to a bad debt which was "the fault of PC World who have processed a finance agreement for a computer after (he) had rejected it within 2 hours of signing the agreement", the entries relating to the appellant, which the second respondents caused to be registered, remained on the registers of the credit reference agencies until at least 2005.
Action raised by appellant
[12] Early in 2004, the appellant raised the present action in Aberdeen Sheriff Court against the first and second respondents. The appellant sought declarator that he was entitled to rescind and had validly rescinded (i) the contract of sale between himself and the first respondents dated 28 December 1998, by giving notice to the first respondents on 29 December 1998 and (ii) the consumer credit agreement between himself and the second respondents dated 29 December 1998, by notice to the second respondents in or around February 1999. The appellant also sought payment of an award of damages of £250,000, together with interest, against the second respondents.
[13] The crave for declarator proceeded on the basis that it had been an express term of the contract of sale between the appellant and the first respondents that the laptop computer would have an internal modem. It did not. The appellant averred that he was entitled to rescind the contract of sale in terms of section 15B of the Sale of Goods Act 1979. It was a matter of agreement that the credit agreement was a debtor-creditor-supplier agreement falling within section 12 (b) of the 1974 Act. The appellant averred that accordingly, by virtue of the terms of section 75(1) of the 1974 Act, he was also entitled to rescind the credit agreement. The appellant averred he had rescinded both contracts. The contract of sale had been rescinded during his visit to the first respondents' premises in Aberdeen on 29 December 1998. The credit agreement had been rescinded, in or around February 1999, during a telephone conversation between the appellant and the second respondents.
[14] The appellant sought damages from the second respondents for the loss and damage he had suffered by reason of their fault and negligence. He averred in Cond 5:
"... It was the second defenders' duty to take reasonable steps to satisfy themselves as to whether the pursuer had validly rejected the laptop and rescinded the contract of sale, and not merely to adopt the first defenders' position without further inquiry when they knew it to be in dispute. It was the second defenders' duty to accept the pursuer's lawful rescission of the credit agreement. In relation to each and every occasion on which...
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