Christopher Doyle v Pra Group (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Peter Jackson,Lord Justice Flaux,Sir Terence Etherton MR |
| Judgment Date | 23 January 2019 |
| Neutral Citation | [2019] EWCA Civ 12 |
| Date | 23 January 2019 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2018/0006 |
[2019] EWCA Civ 12
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HHJ Madge
B22YP133
Royal Courts of Justice
Strand, London, WC2A 2LL
THE MASTER OF THE ROLLS
Lord Justice Flaux
and
Lord Justice Peter Jackson
Case No: B2/2018/0006
Thomas Brennan-Banks (instructed by Wannops Law) for the Appellant
Richard Jones QC and Philip Mantle (instructed by Howell-Jones LLP) for the Respondent
Hearing date: 16 January 2019
Approved Judgment
This is an appeal in relation to a preliminary issue as to whether the claim of the respondent, PRA Group (UK) Limited (“PRA”), against the appellant, Christopher Doyle, for all sums outstanding under a credit card agreement between MBNA Europe Bank Limited (“MBNA”) and Mr Doyle (“the Agreement”), is barred by section 5 of the Limitation Act 1980 (“ LA 1980”).
The Agreement is subject to the Consumer Credit Act 1974 (“CCA”). The preliminary issue turns on whether the cause of action for the outstanding sums accrued when Mr Doyle first defaulted in his payments or only when Mr Doyle failed to comply with the default notice stipulated by CCA s.87(1) and required by clause 8f of the Agreement.
In his judgment delivered on 1 June 2017 Deputy District Judge Medlicott, sitting in the Uxbridge County Court, found in favour of Mr Doyle. By his order dated 12 December 2017 His Honour Judge Madge, sitting in the County Court at Central London, allowed PRA's appeal.
Mr Doyle has appealed to this court with the permission of Asplin LJ.
The Agreement, which was made in 1997, was a running account credit card agreement. PRA claims that, by a series of assignments, the benefit of the Agreement became vested in PRA.
The Agreement has no fixed or minimum duration. It contains provisions for minimum monthly payments. Clause 8f provides for payment of the whole outstanding balance on the account in certain circumstances. It is as follows, so far as relevant:
“8f Subject to us sending you any notice required or taking any steps required by law, you, or your legal representatives, must immediately pay your whole balance (including all interest and charges and fees due) and we may refuse to authorise further transactions if:
• this agreement ends;
• you fail to make a payment in full when it is due;
• you break an important part of this agreement or repeatedly break this agreement and fail to sort the matter out;
• a bankruptcy order is made against you, or you make a voluntary arrangement with your creditors; or
• you die.”
Clause 10 contains provisions enabling the Agreement to be brought to an end by either side, irrespective of any breach.
Mr Doyle fell into arrears on his MBNA account. MBNA served on Mr Doyle a default notice under CCA s.87(1). The default notice stated that Mr Doyle was in breach of the Agreement because he was seriously in arrears and that, in order to remedy the breach, a payment of £4,296.34 had to be paid by 21 December 2009. It also stated that the account balance was £26,570.20. The default notice further stated that, if Mr Doyle failed to make that payment before 21 December 2009, further action might be taken against him, namely that his account would be closed, the agreement would be terminated and court proceedings might be taken to recover the whole amount owed by him.
CCA s.87 provides for the service of a default notice in certain circumstances. It is as follows so far as relevant:
“87.—Need for default notice.
(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default notice”) is necessary before the creditor or owner can become entitled, by reason of any breach by the debtor or hirer of a regulated agreement,—
(a) to terminate the agreement, or
(b) to demand earlier payment of any sum, or
(c) to recover possession of any goods or land, or
(d) to treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred, or
(e) to enforce any security.”
CCA s.88 stipulates the contents and effects of a default notice. Section 88(1) provides that the default notice must be in the prescribed form and specify (a) the nature of the alleged breach; (b) if the breach is capable of remedy, what action is required to remedy it and the date before which that action is to be taken; and (c) if the beach is not capable of remedy, the sum (if any) required to be paid as compensation for the breach, and the date before which it is to be paid. Section 88(2) provides, among other things, that the date specified must not be less than 14 days after the date of service of the default notice, and that the creditor shall not take any such action as is mentioned in section 87(1) before the date so specified.
CCA s.89 provides that, if before the date specified for that purpose in the default notice the debtor or hirer takes the action specified under section 88(1)(b) or (c) (viz. taking the action specified in the default notice to remedy the breach or, if not capable of remedy, paying the sums specified in the default notice as compensation for the breach), the breach shall be treated as not having occurred.
LA 1980
LA 1980 s.5 provides that an action founded on simple contract shall not be brought after the expiration of six years.
The proceedings
On 31 October 2015 PRA issued a Claim Form, with Particulars of Claim attached, for the total amount of £26,570.20 outstanding under the MBNA Agreement, together with interest.
Mr Doyle served a defence dated 25 February 2016, in which he denied that PRA is entitled to recover the amounts claimed. Among the various grounds on which he relies is a contention that the claim is barred by expiry of the limitation period since the last payment was in about April 2009 but the proceedings were not issued until October 2015.
The proceedings were issued within six years of the date specified in the default notice, namely 21 December 2009, but Mr Doyle denied in his Defence that the default notice had any relevance to the commencement and expiry of the limitation period
That particular defence was, as I said, taken as a preliminary issue.
The judgments below
Without any intended discourtesy, it is not necessary to set out the detailed reasoning in the judgments below. It is sufficient to say that District Judge Medlicott found in favour of Mr Doyle on the grounds that the cause of action against Mr Doyle arose at the time of breach of the terms of the Agreement and the service and expiry of the default notice were merely a procedural precondition to issuing proceedings.
His Honour Judge Madge, on the other hand, held that the effect of CCA s.87 was that the cause of action only arose after the time specified in the default notice for remedying the default.
Discussion
Despite the conscientious analysis of the Deputy District Judge and the sustained written and oral submissions of Mr. Thomas Brennan-Banks, counsel for Mr Doyle, I consider that the conclusion of Judge Madge was plainly correct. The point is a very short one of contractual and statutory interpretation.
The classic definition of “cause of action” is that given by Lord Esher MR in Read v Brown (1888) 22 QBD 128, as follows: “every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgement of the Court”. That definition was approved and followed by the Court of Appeal in Coburn v Colledge [1897] QBD 702. Its substance was summarised in the following way by Lord Guest in Central Electricity Board v Halifax Corporation [1963] AC 785 at 806:
“The date when a cause of action accrues may be said to be the date on which the plaintiff would be able to issue a statement of claim capable of stating every existing fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to judgment.”
The effect of the introductory wording of clause 8f of the Agreement (“Subject to us sending you any notice required or taking any steps required by law”) and, more particularly, CCA s.87(1) is that, absent service and expiry of a default notice compliant with CCA ss.87 and 88, there would have been both a complete defence to a claim for all outstanding sums under the Agreement and an unanswerable right to strike out the claim.
Critically, section 87(1) does not provide merely that a default notice is necessary before the commencement of proceedings to recover everything outstanding under the regulated agreement. It provides that there is no right to treat the agreement as at an end or to make a demand for accelerated payment of outstanding amounts. That is not a “procedural” precondition. It qualifies the substantive legal rights of the creditor. The contractual precondition in clause 8f of the Agreement (“Subject to us sending any notice required … by law) must have the same meaning and legal effect.
That interpretation of CCA s.87(1) is also supported by the wording of section 89, which was not the subject of comment in the judgments below but was mentioned in the oral exchanges before us. It provides that, if the debtor or hirer takes the action to remedy the breach or pay compensation for it as specified in the default notice in accordance with section 88(1), “the breach shall be treated as not having occurred”. That consequence is not restricted to a procedural bar on the creditor but reverses the substantive legal rights and obligations of both parties. It is expressed in quite general terms and, on the face of it, applies for all purposes and without limitation of time. As part of a suite of provisions dealing with default notices, which should be interpreted consistently, it is consistent with...
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