Wilson v Robertsons (London) Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 27 July 2006 |
| Neutral Citation | [2006] EWCA Civ 1088 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2006/0121 |
| Date | 27 July 2006 |
[2006] EWCA Civ 1088
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WANDSWORTH COUNTY COURT
HH JUDGE WALKER
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Carnwath and
Lord Justice Moses
Case No: B2/2006/0121
WL100916
PENELOPE WILSON (Litigant in Person) APPELLANT
MATTHEW COOK (instructed by Messrs. Lester Aldridge) for the RESPONDENT
Carnwath LJ :
Background
The Respondent is a jeweller and pawnbroker. Mrs Wilson was a customer between April 1995 and April 1999. Her claim related to 27 pawn broking agreements entered into during this period. It was common ground between the parties that all 27 agreements were regulated agreements for the purposes of the Consumer Credit Act 1974. She claimed that the agreements were defective under the Act, and therefore unenforceable or only enforceable by order of the court. She also claimed that, in particular because of the rate of interest payable, the agreements were exorbitant and contravened ordinary principles of fair dealing.
Her claim was issued in April 2001. It was stayed by the court pending the outcome of an appeal to the House of Lords in another of her cases: Wilson v First County Trust Ltd [2003] UKHL 40. In their decision dated 10 th July 2003, the House of Lords held that the statutory regime of the 1974 Act, albeit in some respects "drastic, even harsh, in its adverse consequences for a lender" (para 72), was not incompatible with the European Convention of Human Rights.
Following that decision, the stay on the present proceedings was lifted in November 2003, and the case came for hearing on April 2005 before HH Judge Rose. His judgment in turn was subject to an appeal before Laddie J in June 2005. The combined effect of those decisions was that the agreements were held to be both defective and extortionate. There was no dispute that Mrs Wilson was entitled in principle not only to retain the amount of the loans to her, but also to return of the pawned goods, and to repayment of interest previously paid by her. The Respondent had returned the goods under six of the open agreements in September, 2003. However, in respect of the seventh agreement (contract 81523), the pawned item – a gold signet ring engraved with her grandmother's crest—had already been sold for its gold value (£19) in February 2000 and could not be returned.
The matter came before HH Judge Walker in December 2006 to determine the outstanding issues as agreed (para 14):
i) The agreement having been found to be unenforceable, what sums, both as to principal and interest, are to be repaid by the defendant to the claimant;
ii) The amount of damages to be paid by the defendant as a result of the destruction of the gold ring pawned under an unenforceable agreement;
iii) The amount of interest to be added to sums in paragraphs 1 and 2 as compensation for the delay caused by the stay of the claim;
iv) The costs of the whole claim.
He determined both substantive issues (i) and (ii) in favour of the Respondent, and made orders in respect of interest and costs. Permission to appeal was granted by Hallett LJ on issues (i) and (ii) . She did not grant permission on issue (iii), but indicated that the application could be renewed before us. We refused the application for reasons which I will explain later in the judgment. It was agreed that discussion of issue (iv) would await the decision on the substantive issues.
The agreements
Seven items, or groups of items, were initially pawned in return for seven loans. But at the expiry of the period set by each initial agreement the loan was "renewed", a word which I use at this stage purely by way of description. It is the correct characterisation of these "renewal" transactions which is at the heart of the main issue in the case.
As to the nature of the renewal arrangements, the judge referred to the evidence of Mrs Wilson herself, and of Mr Michaels and Mr Hall, respectively director and employee of the Respondent. He treated them as "incorporated" into the judgment. Mrs Wilson's evidence was that she understood each renewal agreement as –
"… a novation, the new advance … being applied to discharge the indebtness on the earlier agreement"
Mr Michaels said that the purpose of the renewal -
"… was to ensure that the item pledged was retained by us. No additional sums of money were paid to her. Mrs Wilson's liability to pay the principal on the first agreement was removed and replaced by the liability to pay the same amount on the subsequent agreement."
Mr Hall said:
"It was often the case that when someone came in to redeem the pledge they in fact wanted to keep the loan outstanding. In those circumstances they would pay the interest off and the capital would be rolled over into a new contract and the pledge returned to the office safe. When this occurred, I would normally endorse the old agreement number on the top of the new agreement so that it could be seen instantly that it was a roll over."
8. The agreements themselves were in standard form. There was no material difference between the initial agreement and the renewals. For example, agreement no. 61360, dated 22 nd May 1995 related to a loan of £400, secured by deposit of a Cartier watch. The agreement stated:
"I (Mrs Wilson) have deposited with the pawnbroker and the pawnbroker has taken in pawn, the property as stated in the Schedule above (i.e. the watch) as security for a loan of £400.00 together with interest at the monthly rate of £18 (4.5%)"
The period of the loan was given as six months, and the "redemption date" was given as 21 st November 1995. Clause 2 provided:
"2.1 When the property becomes realisable under this Act the pawnbroker may sell the property either by public auction or by private treaty;
2.2 For the purpose of section 121(6) of the Act it is agreed between the pawnbroker and the debtor that the true value of the property shall have been obtained if the property is sold by the pawnbroker at public auction."
As explained by Mr Hall, the only indication on its face of a renewal agreement was the addition at the top of a manuscript note of the number of the original agreement in that series.
It should also be noted that in some of the cases the renewal arrangements were backdated. This was at the heart of one of the issues before Laddie J, and one of the reasons for declaring the agreements defective. He gave an illustration:
"The relevant facts in this case may be illustrated by reference to two agreements entered into by Mrs Wilson under which she pawned to the Respondent the same Lady's Cartier Wristwatch. The first is contract No. 61360. It is dated 22 May 1995 and it sets a monthly interest rate of 4.5%. It sets a full period of redemption of 6 months, that is until 21 November 1995. In fact the watch was not redeemed within that period but the Respondent had not disposed of it when the second agreement, No 66330, was entered into. The latter was signed by Mrs Wilson on 22 March 1996. However it was antedated by three months to 21 December 1995. The 6 month redemption period was fixed as 20 June 1996, that is to say 6 months from the antedated date, not from the actual date of signing. From the latter date, the redemption period was only 3 months. Under the new agreement the monthly rate of interest was 5%."
The law
At the heart of the case is the interpretation of section 106(d) of the 1974 Act to the facts of the case. That section provides:
" 106 Ineffective securities
Where, under any provision of this Act, this section is applied to any security provided in relation to a regulated agreement, then, …
(a) the security, so far as it is so provided, shall be treated as never having effect;
(b) any property lodged with the creditor or owner solely for the purposes of the security as so provided shall be returned by him forthwith;
(c) the creditor or owner shall take any necessary action to remove or cancel an entry in any register, so far as the entry relates to the security as so provided; and
(d) any amount received by the creditor or owner on realisation of the security shall, so far as it is referable to the agreement, be repaid to the surety."
In relation to closed agreements, section 139 gives the court power, if it "thinks just", to "reopen" an agreement which is "extortionate" (as defined by s 138) . The court may make various forms of order, including directing "accounts to be taken", for the purpose of "relieving the debtor or a surety from payment of any sum in excess of that fairly due and reasonable."
Reference must also be made to the definitions of "security" and "surety" (s 189):
"Security" in relation to an actual or prospective consumer credit agreement or consumer hire agreement, or any linked transaction, means a mortgage, charge, pledge, bond, debenture, indemnity, guarantee, bill, note or other right provided by the debtor or hirer, or at his request (express or implied), to secure the carrying out of the obligations of the debtor or hirer under the agreement;
"Surety" means the person by whom any security is provided, or the person to whom his rights and duties in relation to the security have passed by assignment or operation of law.
Also relevant are the provisions indicating when a security becomes "realisable". Section 116 provides a minimum period of 6 months within which the pawn is redeemable. If the pawn has not been redeemed by the end of the redemption period, it "becomes realisable" (s 120) . Where the pawn has become realisable, the pawnee may sell it having given...
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