Mr Keith Harrison v Link Financial Ltd
| Jurisdiction | England & Wales |
| Judge | HHJ Chambers |
| Judgment Date | 28 February 2011 |
| Neutral Citation | [2011] EWHC B3 (Mercantile) |
| Docket Number | Claim No: 9CC00709/MC736 |
| Date | 28 February 2011 |
| Court | Mercantile Court |
[2011] EWHC B3 (Mercantile)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MOLD DISTRICT REGISTRY
MERCANTILE COURT
His Honour Judge Chambers QC
(sitting as a Judge of the High Court)
Claim No: 9CC00709/MC736
Martin Budworth (instructed by Watsons Solicitors) for the Claimant
Iain MacDonald (instructed by DLA Piper LLP) for the Defendant
Hearing date: 30 th September 2010
HHJ Chambers QC:
Introduction
The interval between the date of the hearing and the handing down of this judgment has in large part been devoted to the production of a series of written submissions by the parties as well as the preparation of this document.
This is a case about a credit card agreement ("the agreement") entered into between the Claimant and MBNA International Bank Ltd now MBNA Europe Bank Limited ("MBNA") in 1998. As matters stand, it is the common position of the parties that any indebtedness under the agreement was assigned to the Defendant in October 2008. Precisely when in October is a matter of contention.
The Claimant says that he is not liable for any sum standing to his debit under the agreement. In the counterclaim that sum is put at £20,269.69.
The reasons why the Claimant says that he is not liable under the agreement are set out in the Amended Particulars of Claim. They are said to arise from breaches of the Consumer Credit Act 1974 ("the Act"). And related legislation. Unless otherwise stated, all references to "sections" hereafter, are to sections of the Act. I summarise the alleged breaches as follows:
Irredeemable breaches under section 127(3)
Section 61(1)
Schedule 6 para 4 of the Consumer Credit (Agreements) Regulations 1983 ("the Regulations")
Failure to set out a rate of interest applicable to credit card cheques and other non-card transactions and a rate for balance transfers.
The case is based upon the assertion that the Claimant received the Application Form (TB1/128) on the reverse of which were provisions headed "FINANCIAL & RELATED CONDITIONS" (TB1/129) ("the FRC") but that neither then nor when his card was sent did he receive anything akin to the document headed "TERMS & CONDITIONS" ("the terms & conditions") referred to in the evidence indifferently as "C1" and "NW6" (TB4/1510) ("C1").
Although the failures of themselves constituted redeemable breaches, the need to refer over to the terms & conditions, whether provided or not, in order to ascertain the relevant interest rates, put MBNA and thus the Defendant in irredeemable breach.
Schedule 6 para 5 of the Regulations
Failed to state "any power of the creditor to vary what is payable".
Redeemable breaches under section 127(1) and (2)
Schedule 1 para 22 of the Regulations
Failed to set out the default charges payable by the Claimant on breach of the agreement.
Further failed to set out a term allowing MBNA to vary the terms of the agreement except at condition 8 which provides a power to vary the rates of interest.
Sections 62 and 63 — redeemable breaches under section 127(1) and (2)
Section 62 Failed to send a copy of the terms & conditions with the application pack.
Section 63 Failed to provide a copy of the executed agreement.
Section 78(1)
MBNA and the Defendant remain in default of a properly constituted request under section 78(1).
Sections 87(1) and 88 and schedule 2 para 3 of the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 ( SI 1983/1561)
By a notice dated 3 October 2008 and received on 9 October 2008 the Claimant was given until 21 October to pay £3,3361.78 a period of 12 (not 14) days. Furthermore the relevant indebtedness was assigned to the Defendant before 21 October 2008 thus rendering the notice ineffective to discharge its function.
Further the sum of £3,3361.78 was overstated by £26.65.
The wrong agreement number was given.
MBNA and the Defendant have harassed the Claimant in such a way as to disentitle the Defendant from any recovery under the agreement.
The Defendant resists the claim on largely factual grounds. It asserts that a copy of the terms & conditions would have been provided to the Claimant prior to his entering into the agreement. The agreement was entered into by a combination of the Claimant sending in the application form dated 28 April 1998 and MBNA issuing a credit card which was received in a card holder on or about 21 May 1998 (TB1/150). All the relevant rates of interest were to be found in the FRC but reference to the terms & conditions completed the definitions of those elements of the arrangement to which the rates applied. The consequence was that the transaction was compliant with regulation 6 and schedule 6 of the Agreements Regulations.
The power to vary the agreement was to be found in condition 15 of the terms & conditions.
Condition 14 of the terms & conditions set out the default charges.
The Defendant asserts that with the credit card the Claimant would have received a copy of the agreement as executed which would have contained what is to be found in C1 (TB4/1510) with or without the application details on the obverse and thus was section 63 compliant, the original provision of the terms & conditions having been section 62 compliant.
The Defendant asserts that the balance said to be due is correctly calculated and that any miscalculation is, in any event, irrelevant to the overall outcome of the case.
The Defendant denies entitlement to relief including a declaration that the agreement cannot be enforced by reason of non-compliance with section 78(1) or under section 142(1). Relief under section 140B of the Act is also denied.
The Defendant counterclaims for £20,269.69.
Thus much of the analysis will depend upon my findings on the following issues:
a. Did MBNA enclose a copy of its terms & conditions with the application form that it sent to the Claimant?
b. Did MBNA enclose a copy of its terms & conditions with the card that it sent to the Claimant in May 1998?
c. Did the MBNA serve a compliant default notice?
d. Has the Defendant complied with section 78(1)?
What happened?
In order to answer most of the questions that I have set out one must consider the history of events during the time that MBNA (as opposed to the Defendant) had the carriage of the card.
It is common ground that the Claimant was a targeted subject of an extensive mail shot. In other words his name appeared upon an invitation to apply for a credit card but that name could have been among 5 million to whom such an invitation was sent.
Given the numbers, it is surprising that there can be no real confidence as to what the relevant terms & conditions were when the Claimant signed the application form (TB1/128) on 28 April 1998. The Claimant kept no such terms & conditions because he says that he never received any. MBNA had no policy of retention beyond six years.
We do know what the FRC were both because the Claimant photocopied the form that he returned and its reverse (TB1/129) and MBNA has located its own copies.
An oddity of the table that appears in paragraph 7 of the FRC is that it includes Retail Transactions under the generic heading "Cash Advances".
The mistake does not appear in the terms & conditions first proffered as being those extant at the time of the agreement, namely C (TB1/156) or in those finally proffered and spoken to by Mrs Nicola Worden of MBNA, namely C1 (TB1/158).
Absorbing as was the description given by Mrs Worden of her impressive attempts to put together an archive of relevant terms & conditions, the fact is that the exercise only began in the middle of 2009 and that, until C1 made its appearance, MBNA appeared to have every confidence in C as the embodiment of the relevant terms & conditions.
Entirely understandably, the Defendant's evidence given through MBNA is of the "would have" variety. "We would have sent the terms & conditions because that is what we were required to do and our systems would have been designed to do". But there was evidence neither of the system nor its implementation.
The Claimant said that he did not expect his application to mature, without more, into an agreement. He expected further formality. Thus he was not particularly surprised by the lack of extensive terms & conditions, not least because he gave no thought to the matter. Indeed he admitted that at no time were terms & conditions things to which he did give real thought.
Despite the misleading title of the brochure "TERMS & CONDITIONS for MBNA Cardholders" ("the brochure"), the Claimant does not seem to have thought that these were, in fact, the governing terms and conditions. I say this because he gave sufficient consideration to the document to decide that he did not want to buy the PPI covered by the brochure.
Nevertheless, the Claimant kept the brochure together with a photocopy of the application form annotated with the date of its return (28/4/98) and the identity of the person who had returned it (the Claimant) (TB1/128). Also retained was the photocopy of the FRC (TB1/129).
In addition the Claimant kept the letter sent to him by MBNA (TB3/941) and the marketing flyer (TB3/943).
The Defendant pointed to the fact that, not many months previously, the Claimant had successfully applied for a card from American Express which was granted under a procedure akin to that observed by MBNA. He could not therefore have thought that any further step or documentary involvement on his part would be required. The Claimant's response was essentially to the effect that he did not have that in mind when he became involved with MBNA.
The Defendant also suggested that a presently adverse outcome to proceedings in respect of the American Express card had...
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Christopher Doyle v Pra Group (UK) Ltd
...serves a defective default notice, he or she could then serve another one, drawing out the period of delay even further: see Harrison v Link Financial Limited [2011] EWHC B3 at [75]. In the same vein, he said that the effect of CCA s.185 was that, in the case of a joint account, the failure......