Karen Smith v The Royal Bank of Scotland Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Bean,Lord Justice Lewis,Lady Justice Elisabeth Laing |
| Judgment Date | 30 June 2021 |
| Neutral Citation | [2021] EWCA Civ 977 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2021/0154 |
[2021] EWCA Civ 977
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT EXETER
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Bean
Lord Justice Lewis
and
Lady Justice Elisabeth Laing
Case No: B2/2021/0154
Robert Weir QC and Jonathan Butters (instructed by The Claims Guys Legal Limited) for the Respondent/Claimant
John Taylor QC (instructed by Pinsent Masons) for the Appellant/Defendant
Hearing date: 22 June 2021
Approved Judgment
The decision of the Supreme Court in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61; [2014] 1 WLR 422 has led to a large volume of claims against banks by customers who took out payment protection insurance (PPI). One of these claims was brought by the Respondent, Karen Smith. She had applied for a credit card with the Appellant, the Royal Bank of Scotland (“the Bank”), in January 2000. She also entered into a separate contract for PPI. Premiums for the PPI were charged to the credit card. If any debit balance on the credit card was not paid in full each month, interest became due on that amount.
The Bank received commission payments from the PPI insurer. The commission payable was more than 50% of the premiums. Neither the fact that commission was payable, nor the amount, was disclosed to Mrs Smith. Mrs Smith terminated the PPI contract in early 2006 but did not terminate the credit card agreement which continued until some time in 2015.
Mrs Smith brought a claim in the County Court at Bodmin for repayment of the PPI premiums and interest. It was allocated to the small claims track, without objection from the other party.
The trial took place before District Judge Stone. He decided that in the context of financial dealing which included the provision of a PPI policy there existed a relationship between Mrs Smith and the Bank that was unfair within the meaning of section 140A of the Consumer Credit Act 1974 (the Act). He made an award of £735.11, interest of £611.18 and small claims track costs assessed at £365 giving a total of £1711.29.
A first appeal by the Bank was heard by His Honour Judge Allan Gore QC in the County Court at Exeter and was dismissed in a reserved judgment given on 13 November 2020.
Claims seeking the repayment of sums on the basis that there had been an unfair relationship may involve relatively small amounts of money so far as the claimant is concerned. The volume of such claims may, however, be large, and the implications for the bank concerned may therefore be substantial.
The appellant Bank, consequently, sought permission to bring a second appeal against the order of the District Judge requiring it to repay premiums and interest. There were two substantive grounds of appeal. First, it was said that, on a proper interpretation of the provisions of section 140A-C of the Act and the transitional provisions, the respondent had no cause of action as the PPI contract had been terminated before the relevant statutory provisions came into force. Secondly, it was said that the judge below ought to have decided that the respondent's claim was time-barred under section 9 of the Limitation Act 1980 as the claim related to the repayment of sums paid over 13 years before the issue of the claim. There was also a third, procedural, ground of appeal which I need not mention.
Brief reasons were submitted on behalf of Mrs Smith as to why permission to appeal should be refused, in accordance with paragraph 19 of Practice Direction 52C. The submissions also contended that, if permission to appeal was granted on any grounds, the grant should be subject to a condition pursuant to CPR 52.6(2)(b) that the appellant Bank:
“shall in any event pay the respondent's reasonable costs of the proceedings before the Court of Appeal, to be limited by agreement to, or in default, by order of the court. 4”
Footnote 4 stated (in a smaller font size than the main text) that “this is a prospective costs order seeking a condition on the grant of permission and can thus be distinguished from Akhtar v Boland [2014] EWCA Civ 943 where the Court of Appeal (expressing regret at the outcome) held that there could be no costs order in favour of the successful party in a case proceeding on the small claims track after determination of second appeal unless one of the exceptions set out in CPR 27.14(2) applied”. It is unfortunate that the issue of whether the Court of Appeal has jurisdiction to attach conditions to the grant of permission relating to the payment of costs on an appeal from the small claims track was only referred to in the footnote, and then only obliquely.
The application for permission to appeal (PTA) was considered by Asplin LJ on the papers in the usual way. By a decision sealed on 9 March 2021 she granted permission on all three grounds of appeal subject to the condition that the Appellant bank was to pay Mrs Smith's reasonable costs of the appeal limited to the sum agreed between the parties, or, in default of agreement, determined by the court. She stated her reasons as follows:-
“All of the grounds have a real prospect of success and raise important points of principle in relation to this type of case, of which there are many. There is no High Court or Court of Appeal authority in relation to the interpretation and effect of the relevant transitional provisions and the application of the Limitation Act 1980 in the circumstances.
The condition is imposed because the Respondent is an individual with a small claim who is required to defend a second appeal which is of importance to the Applicant/Appellant, a large corporation, because of...
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