Durkin v DSG Retail Ltd

JurisdictionScotland
Judgment Date15 June 2010
Neutral Citation[2010] CSIH 49
Docket NumberNo 43
Date15 June 2010
CourtCourt of Session (Inner House)

Court of Session Inner House First Division

Lord President (Hamilton), Lord Eassie, Lord Mackay of Drumadoon

No 43
Durkin
and
DSG Retail Ltd

Contract - Consumer contract - Rescission of contract for supply - Whether entitled on same grounds to rescind credit agreement - Whether entitled to same remedies as against creditor - Consumer Credit Act 1974 (cap 39), sec 75(1)

The Consumer Credit Act 1974 (cap 39) provides in sec 75(1) that if a debtor under a debtor-creditor-supplier agreement falling within sec 12(b) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor. It was a matter of agreement between parties that the disputed contract fell within the terms of sec 12(b) and that the terms of the 1974 Act applied.

The appellant raised an action for declarator and reparation in the sheriff court in respect of a contract of sale entered into by him with the first respondents and a credit agreement between him and the second respondents. He sought declarator against both respondents and damages against the second respondents. The appellant had purchased a laptop from the first respondents in December 1998 under a consumer credit agreement with the second respondents. On the day following purchase he returned to the first respondents shop and rejected the laptop as being disconform to contract due to its not having a built-in modem. The first respondents did not accept the appellant's rejection of the contract. The appellant made no payments and the first respondents having refused to repay the £50 deposit made to them on the initial purchase thereafter settled a small claims action raised by the appellant against them for repayment of that sum.

The second respondents nevertheless insisted on the appellant making payment in terms of the credit agreement with them and eventually served a default notice on the appellant. They caused entries to be made in the registers of the two largest credit reference agencies in the United Kingdom to the effect that the appellant was in default in his obligations to them to the extent of £1,499. The appellant repeatedly requested by telephone that they remove the adverse entries but they refused to do so and made no enquiries into his claim that he had been entitled to and had rescinded the contract of sale. The appellant registered notices of correction with the credit reference agencies but the adverse entries remained on the registers until 2005.

Following proof, the sheriff granted decree of declarator against the first respondents to the effect that the appellant had been entitled to and had rescinded the contract of sale between those parties. Declarator was also granted against the second respondents to the effect that the appellant had been entitled to and had rescinded the contract with them by notice and was entitled to damages with interest. The appellant sought damages in respect of three heads of loss, namely: injury to his credit; inability to consolidate his debts due to an application for borrowing facilities being rejected due to an adverse credit report and consequent bank charges; and inability to purchase a holiday home in Spain calculated by reference to the difference in purchase price between 2003 and 2006. Damages were awarded by the sheriff under all three heads of loss sought, albeit not the full amount sought under the third head.

The appellant appealed against the decision in respect of the amount of damages under the third head. The grounds thereanent were that the sheriff had erred: in discounting from the third head the notional sale costs of the Spanish property in 2006 and the interest charges payable on the Spanish property between 2003 and 2006; and in the detail of calculations in the cost of purchase in 2003 and 2006.

The second respondents cross-appealed, maintaining that the sheriff had erred in granting declarator by holding that a claim for rescission of a credit agreement was a "like claim" in terms of sec 75(1) of the 1974 Act; that even if it was a like claim the intimation to the first respondents had also constituted intimation to the second respondents; and that on the evidence no finding of fact that the appellant had intimated directly to the second defenders his rescission of the credit agreement could be made. In relation to the award of damages it was contended that the sheriff had erred in holding that: the second respondents owed a duty of care of the scope contended for, the appellant's economic loss not having been a foreseeable consequence of any incorrect information made available by the second respondents; a duty of care of the nature averred by the appellant had been proved to exist; if a duty of care of such scope and nature existed, the second respondents had acted in breach of that duty; such a breach had occurred on the basis that the credit agreement had been validly rescinded by the appellant; in 1999 the appellant routinely made use of credit cards with a zero per cent rate of interest; he sustained loss in relation to the payment of credit card interest; he would have purchased a house in Spain but for the fault and negligence of the second respondents; his economic loss in failing to so purchase was the result of his having to remortgage his house in Aberdeen to service credit card interest payments; and his economic loss in respect of interest et separatim the loss arising from failure to purchase in Spain had been satisfactorily established in evidence as having been caused by the second respondents' breach of duty.

Held that the words "a like claim" in sec 75(1) of the 1974 Act should be given their ordinary meaning in the context in which they were found, entitling a debtor to pursue against his creditor claims he could have pursued against his supplier, in respect of the supplier's misrepresentation or breach of contract, and the claims of the pursuer in this action did not fall within that category (para 57); and cross-appeal allowed.

United Dominions Trust Ltd v Taylor 1980 SLT (Sh Ct) 28 disapproved.

Richard Durkin raised an action for declarator and reparation against the respondents in the sheriffdom of Grampian Highland and Islands at Aberdeen. The sheriff (JK Tierney) following proof on 26 March 2008 granted declarator against the respondents and decree for payment of damages against the second respondents. The appellant appealed and the second respondents cross-appealed against that decision to the Court of Session.

Cases referred to:

Andrews v Barnett Waddingham (A Firm)UNK [2006] EWCA Civ 93; [2006] PNLR 24; [2006] Pens LR 101

Aneco Reinsurance Underwriting Ltd (In Liquidation) v Johnson and Higgins Ltd sub nom Aneco Reinsurance Underwriting Ltd v Johnson Higgs LtdUNKUNKUNK [2001] UKHL 51; [2001] 2 All ER (Comm) 929; [2002] 1 Lloyd's Rep 157; [2002] CLC 181

Banque Bruxelles Lambert SA v Eagle Star Insurance Co LtdELRWLRUNK [1995] QB 375; [1995] 2 WLR 607; [1995] 2 All ER 769

Calvert v William Hill Credit LtdUNKELRWLR [2008] EWCA Civ 427; [2009] Ch 330; [2009] 2 WLR 1065; 159 NLJ 36

Davies v TaylorELRWLRUNK [1974] 1 AC 207; [1972] 3 WLR 801; [1972] 3 All ER 836

Forward Trust Ltd v Hornsby and Windermere Aquatic Ltd 1995 SCLR (Notes) 574; [1996] CCLR 18

Henderson v Royal Bank of Scotland plcUNK [2008] CSOH 146; 2008 SCLR 823; 2008 GWD 34-518

McWilliams v Sir William Arrol & CoSCWLRUNK 1962 SC (HL) 70; 1962 SLT 121; [1962] 1 WLR 295; [1962] 1 All ER 623

Melluish (Inspector of Taxes) v BMI (No 3) Ltd and orsELRWLRUNK [1996] AC 454; [1995] 3 WLR 630; [1995] 4 All ER 453

Office of Fair Trading v Lloyds TSB Bank plcUNKELRWLRUNK [2006] EWCA Civ 268; [2007] QB 1; [2006] 3 WLR 452; [2006] 2 All ER 821

Pepper (Inspector of Taxes) v HartELRWLRUNK [1993] AC 593; [1992] 3 WLR 1032; [1993] 1 All ER 42

R v Montila and orsUNKWLRUNKUNK [2004] UKHL 50; [2004] 1 WLR 3141; [2005] 1 All ER 113; [2005] 1 Cr App R 26

R v Secretary of State for the Environment, Transport and the Regions, ex p Spath Holme LtdELRWLRUNK [2001] 2 AC 349; [2001] 2 WLR 15; [2001] 1 All ER 195

Simmons v British Steel plcUNKSCUNK [2004] UKHL 20; 2004 SC (HL) 94; 2004 SLT 595; 2004 SCLR 920

South Australia Asset Management Corp v York Montague Ltd; United Bank of Kuwait plc v Prudential Property Services Ltd; Nykredit Mortgage Bank plc v Edward Erdman Group LtdELRWLRUNK [1997] AC 191; [1996] 3 WLR 87; [1996] 3 All ER 365

Spring v Guardian Assurance plcELRWLRUNK [1995] 2 AC 296; [1994] 3 WLR 354; [1994] 3 All ER 129

United Dominions Trust Ltd v Taylor 1980 SLT (Sh Ct) 28

Textbooks etc. referred to:

Committee on Consumer Credit, Consumer Credit: Report of the Committee ("the Crowther Report") (Cmnd 4596, 1971), Ch 6.6

Davidson, FP, "The Missing Linked Transaction" (1980) 96 LQR 343-348

Guest, AG, and Lloyd, MG, Encyclopaedia of Consumer Credit Law (Sweet and Maxwell , London, 1975), vol 1, p 2074/4

Lowe, NV, "Missing Linked Transactions: Further Observations" (1981) 97 LQR 532, 533

Simpson, JA, and Weiner, ESC, Oxford English Dictionary (2nd ed, Clarendon, Oxford, 1989)

The cause called before an Extra Division, comprising the Lord President (Hamilton), Lord Eassie, and Lord Mackay of Drumadoon, for a hearing on the summar roll, on 12 to 14 January and 2, 4 and 5 February 2010.

At advising, on 15 June 2010, the opinion of the Court was delivered by Lord Mackay of Drumadoon-

Opinion of the Court-

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...

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