Ketley v Gilbert

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date21 Dec 2000
Judgment citation (vLex)[2000] EWCA Civ J1221-15
Docket NumberCase No: B2/99/1183

[2000] EWCA Civ J1221-15




(Judge Faulks) (District Judge Powell)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before :

The Master Of The Rolls

Lord Justice Brooke and

Lord Justice Robert Walker

Case No: B2/99/1183

Michael Ketley
Claire Nicole Gilbert

Michael Brindle QC & Patrick Goodall (instructed by Freshfields Bruckhaus Deringer,London, EC4Y 1HS) for the Claimant/Appellant

Hilary Heilbron QC & Tim Kevan (instructed by Ford & Warren, Leedds, LS1 2AX) for the Respondent


This is an appeal by the claimant Michael Ketley from a judgment of Judge Faulks at the Newcastle-upon-Tyne County Court on 6th October 1999 when he allowed an appeal by the defendant from an order of District Judge Powell on an assessment of damages in the same county court on 17th August 1999, who had directed that judgment be entered for the claimant for £2,078.63 inclusive of costs.


The order of Judge Faulks, which simply states that the appeal of the Applicant (sic) was allowed, is ineptly drawn. As the Judge made clear, the appeal from the District Judge's order was limited to a challenge to part of his award, in the sum of £684.54 (together with interest), in relation to Mr Ketley's claim for a replacement vehicle while his car was being repaired following a road traffic accident.


This appeal was listed to be heard with a number of other appeals which raised different issues that had been troubling the lower courts since the decisions of the Court of Appeal and the House of Lords in the leading case of ( Dimond v Lovell [2000] 1 QB 216 CA; [2000] 2 WLR 1121). In the event the other appeals were compromised without the need for a hearing, and the present appeal was the only one which calls for a decision of the court, following full argument by leading counsel on both sides.


The underlying facts of the case are relatively straightforward. Mr Ketley was driving his car in Darlington, County Durham on 27th June 1998, when it was struck from behind by the defendant's car. His car was rendered temporarily unroadworthy, and he entered into a written agreement on 30th June 1998 with an accident hire company, 3 Arrows Ltd, whereby he hired a car from them for 17 days. The hire charges amounted to £27.77 per day for 17 days, plus a collision damage waiver charge of £6.50 per day. Together with VAT of £101.95, the charges totalled £684.54, and this was the amount which was in issue before Judge Faulks.


Clause 5(1) of the agreement provided that:


Where the hire is consequent upon the Hirer's own vehicle being unroadworthy as a result of a car accident:


The hire and other charges including Value Added Tax will be repaid by the Hirer to the Owner by a single payment when the claim against the party the Hirer alleges to be responsible for the accident (hereinafter called the Third Party) for damages for loss of use of the Hirer's own vehicle is satisfied or on the expiry of 12 months starting with the date of this agreement, which-ever is earlier." (Emphasis added)


The issue at the heart of this appeal is whether this was a regulated agreement within the meaning of the Consumer Credit Act 1974. If it was, its formalities did not comply with the requirements of the Act, and on the authority of the House of Lords in Dimond v Lovell the accident hire company would be unable to recover its charges from Mr Ketley and consequently would not be entitled to rely on rights of subrogation to recover them from the defendant (or her insurers).


The main issue on the appeal is whether the agreement is an unregulated agreement by virtue of the Consumer Credit (Exempt Agreements) Order 1989. Article 3(1) of that Order provides that:

"The [Act] shall not regulate a consumer credit agreement which is an agreement of one of the following descriptions, that is to say (a) a debtor-creditor-supplier agreement being either (i) an agreement for fixed-sum credit under which the total number of payments to be made by the debtor does not exceed four, and those payments are required to be made within a period not exceeding 12 months beginning with the date of the agreement " (emphasis added)


It will be noticed that whereas the Order is in these terms, the agreement at the heart of this appeal used the slightly different language "by a single payment on the expiry of 12 months starting with the date of this agreement".


The Judge ruled in favour of the defendant, saying that the words "on the expiry of 12 months", meant in plain English "after 12 months have been exceeded". He added that if there had been any doubt about this interpretation, he would have held that the wording was at best ambiguous, and that the claimant had failed to satisfy the burden of proof that lay on him to show that the agreement came within an exemption permitted under the 1974 Act (see the Unfair Terms in Consumer Contracts Regulations 1994, regulation 6).


The contending arguments can be summarised briefly in these terms. Mr Brindle, QC, for the claimant, says that the clause in the agreement is clear and unambiguous and that it means that the liability to pay arises coincidentally with the termination of the period of 12 months. He relies on a number of decided cases in support of this proposition, including the judgment of Warrington J in English v Cliff [1914] 2 Ch 376, 380–381, a case concerned with the rule against trusts in perpetuity. He therefore contends that the relevant liability arose within a period not exceeding 12 months, because it arose exactly on 12 months, at the termination of the period of 12 months. He also argues that, in this context, the expression "on the expiry of" is synonymous with the word "within", and not, as the Judge appeared to find, with the expression "after the expiry of". For these reasons he argues that the agreement is within the terms of the exemption and is enforceable.


Miss Heilbron, QC, for the defendant, says that under this rental agreement payment cannot be made until the 12 months have expired. Thus the hirer has to pay on the day following the expiry of 12 months. The agreement therefore falls outside the exemption. From a different perspective she says that, in order to comply with the exemption, if an agreement starts on 1st January, the payment must be made at the latest on 31st December, if it is to be required to be paid "within a period not exceeding 12 months". If the payment has to be made on 31st December at the latest, then it is not made on the expiry of 12 months. She also adds that, if the clause is ambiguous, it must be construed in favour of the consumer.


She says that earlier decided cases are of little relevance, because the clauses in a particular agreement must be construed in context. She observes, generally, that cases like the present where a positive act, such as payment, is required, are distinguishable from cases where something happens automatically on the expiry of a time limit, as occurred in English v Cliff.


On first impression Miss Heilbron's arguments appeared to be soundly based. If something has to be done on the expiry of a person's life, it seems to be an abuse of language to say that it may be done within his lifetime. It is necessary, therefore, to examine with some care the authorities on which Mr Brindle relied.


The first of these cases was the judgment of Warrington J in English v Cliff. This case was not concerned with the terms of an agreement or with the terms of primary or secondary legislation. It arose out of the rule against perpetuity which provides that where there are not lives or a life in being to be taken into account, an estate or interest must arise not later than 21 years from its creation in order to be valid.


Warrington J found that many well-known text-books stated the principle that in order to escape the rule against perpetuity the estate or interest or other limitation must arise "within" the period allowed by law. He said, however, at pp 380–381:

"I am quite willing to accept that statement as being for all practical purposes a sufficient statement of the rule, but when I come to consider what that statement means and to apply it to such a case as the present, then, in my opinion, the trust which is to arise 'at the expiration' of the term of twenty-one years does arise 'within' the period of twenty-one years, because I should have to resort to all sorts of subtle calculations and distinctions unless I were to hold that an estate or a trust to arise coincidently with the termination of the period of twenty-one years was a valid estate or trust.

To put an analogous case which occurred to me in the course of the argument, there must be many cases in which a testator has fixed the period of twenty-one years from his death as that at which a class of beneficiaries is to be ascertained, for example a trust for such members of a class of persons as shall be living at the expiration of twenty-one years from his death. I think that any lawyer dealing with such a limitation as that would say without doubt that it was a good limitation, and yet in that case it is necessary to wait until the last infinitesimally small fraction of a minute has expired before it can be said whether a certain number of persons will be living or not at the expiration of that moment of time.

The trust in the present case is to arise at the expiration of the term of twenty-one years, and if looked at from one point of view that trust arises coincidently with the last moment of the term, although. if looked at from...

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2 cases
  • Suzanne Thew v Mrs M Cole (Defendant/Applicant)
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 16 Diciembre 2003
    ...shortly with the exemption argument in this case. Having referred to the decisions of this court in Zoan v Rouamba [2000] 1 WLR 1509 and Ketley v Gilbert [2001] 1 WLR 986 to which I shall come shortly he said: … hire payment is to be deferred "for a period of not more than twelve month......
  • William James King v Andrew Daltray
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 4 Junio 2003 be made within a period not exceeding 12 months beginning with the date of the agreement'. 71. This is not a clear case like Ketley v Gilbert (2001) 1 WLR 986, CA where potentially the words 'on the expiry of 12 months' required payment after the elapse of the 12 months period. The posit......

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