Car Crash Line Ltd, Car Crash Line UK Ltd v Branton Edwards (A Firm)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BROOKE,Sir Christopher Staughton,SIR CHRISTOPHER STAUGHTON,LORD JUSTICE KAY |
| Judgment Date | 18 April 2002 |
| Neutral Citation | [2002] EWCA Civ 634 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 April 2002 |
[2002] EWCA Civ 634
IN THE SUPREME COURT OF JUDICATURE A3/2001/2564
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BRISTOL MERCANTILE COURT
(His Honour Judge Havelock-Allan QC)
Lord Justice Brooke
Lord Justice Kay and
Sir Christopher Staughton
Miss S Carr (instructed by Messrs Weightmans, Liverpool) appeared on behalf of the Appellant Defendants.
Mr R Slade (instructed by Messrs Ross Aldridge, Stroud, Glos) appeared on behalf of the Respondent Claimants.
I will invite Sir Christopher Staughton to give the first judgment.
The defendants in this action, Branton Edwards, appeal, with leave, from an order made by Judge Havelock-Allan QC at a case management conference in the Bristol Mercantile Court.
The claimants are two companies which carried on the business of hiring out cars on credit to motorists whose means of transport has for the time being been removed from circulation by an accident. Although there are two companies, we are told that the second named, Car Crash Line UK Limited, are not (currently at any rate) participating in the action and can be disregarded for the moment. Nevertheless, I shall refer to the claimants as the "finance companies".
In February 1997 the claimants engaged Messrs Branton Edwards, a firm of solicitors in Manchester, to advise them, so they say, in the operation of their business. It was part of the operation of the finance companies that the customers, as I will call them (that is to say, the people who needed cars when their means of transport had broken down), were supposed to pay for the hire of the cars when there had been a recovery from the insurers of the third person who had been responsible for the accident. In practice, that was the time when the hire charges were paid. However, as I understand it, in theory they were supposed to be paid whether there was a recovery from third parties or their insurers or not.
It turned out that these transactions were governed by the Consumer Credit Act 1974. They were regulated consumer credit agreements. The Consumer Credit Act, as we all know, is an Act of some complexity, particularly in the detailed provisions of its statutory instruments. The finance companies had not complied with that legislation. The contracts that they made were in consequence unenforceable under section 127 of the Act. What is more, by subsection (3) of that section the court did not have power to authorise enforcement, so it is said. The defendant solicitors, charged with negligence in arranging the documentation for the finance companies to use, say that, even if the contractual charges had not been enforceable because of the Consumer Credit Act, nevertheless there is a restitutionary remedy which the finance companies must operate in order to mitigate the loss which they are claiming from the solicitors, if for no other reason. The first and major part of the claim relates to some 400 agreements where it is said that the customers have received, or will receive, compensation from the third parties or their insurers and decline to part with it in favour of the claimants. So it is said that this is a loss suffered by the negligence of the solicitors.
There has been no dispute before us that under the Consumer Credit Act the contracts are not enforceable, subject only to the Human Rights Act. The question, however, is whether the claim for a restitutionary remedy would be enforceable. Such a claim, at first sight, would meet an obstacle in the form of a decision of the House of Lords, Dimond v Lovell [2000] 2 WLR 1121, where the key point was expounded by Lord Hoffmann. That also was a case of a regulated agreement under the Consumer Credit Act which was not enforceable as such. It was held that an alternative claim in unjust enrichment could not succeed in those circumstances. Lord Hoffmann, at p.1131, said this:
"The real difficulty, as it seems to me, is that to treat Mrs Dimond as having been unjustly enriched would be inconsistent with the purpose of section 65(1) [the section which made the agreement unlawful]. Parliament intended that if a consumer credit agreement was improperly executed, then subject to the enforcement powers of the court, the debtor should not have to pay. This meant that Parliament contemplated that he might be enriched and I do not see how it is open to the court to say that this consequence is unjust and should be reversed by a remedy at common law …"
The present action was started on 5th March 2001, after the coming into force of the Human Rights Act 1998 on 2nd October 2000.
The case of Wilson v First County Trust Ltd [2001] QB 407 came before the Court of Appeal (consisting of Sir Andrew Morritt V-C, Chadwick and Rix LJJ) on 9th November 2000. The matter was adjourned for representations to be made by the appropriate Minister as to whether section 127(3) of the Consumer Credit Act was compatible with the Human Rights Act and, in particular, article 6 and article 1 of the First Protocol. The adjourned hearing happened on 19th March 2001. It is reported at [2002] QB 74. In that case it was a contractual claim. There was not a restitutionary claim, although attention was drawn to the fact that the position might be similar in the case of a restitutionary claim. The Court of Appeal concluded that section 127(3) was contrary to the Human Rights Act.
Sir Andrew Morritt gave the judgment of the court. At paragraph 40 of the judgment it was said:
"… we are satisfied that (subject to the application of section 3(1) of the 1998 Act) the provisions in section 127(3) of the 1974 Act are incompatible with the rights guaranteed by article 6(1) of the Convention and article 1 of the First Protocol."
The court then went on to consider the difficult task required of judges by section 3, which is to search for some other legitimate interpretation of the statute which would be compatible with the Human Rights Act if it was legally possible. But the Court of Appeal concluded that it was not possible. They said in terms, at paragraph 45:
"We conclude that it is not possible to read and give effect to the relevant provisions of the 1974 Act in a way which is compatible with the pawnbroker's Convention rights."
They then went on to consider whether a declaration of incompatibility should be made. They held, in paragraph 47, that this would serve a legislative purpose under the 1998 Act, in that it provided a basis for a Minister of the Crown to consider whether there are compelling reasons to make amendments to the legislation.
Then, at paragraph 49, they touched on the question of a restitutionary remedy. They said:
"There is no counterclaim for unjust enrichment in the present proceedings. We express no view on the question whether the prospects of successfully pursuing such a claim—which may be taken to have been minimal in the light of Lord Hoffmann's observations in Dimond—have been affected, in any way, by anything which we have decided on the present case. It is unnecessary for us to do so. We are satisfied that, whether or not there is any substance in the submission that those prospects have been revived by this judgment, the point is irrelevant to the question whether a declaration of incompatibility should be made in this case."
Their Lordships...
To continue reading
Request your trial