Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme Cou

[Legal Beagles]

Appeal * Justices * Lady Hale, Lord Clarke, Lord Sumption, Lord Carnwath, Lord Hodge Issue Whether the approach in Harrison v Black Horse [2011] EWCA Civ 1128 is correct. Is the court prevented from finding the existence of an unfair relationship under s.140A of the Consumer Credit Act 1974 if there has been a breach […]

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Mrs Plevin received a PPI policy arranged by an independent broker who identified its recommended lender. Both the lender and broker received undisclosed commissions. Mrs Plevin claimed that that the broker had failed to carry out a proper assessment of her demands and needs, or of the suitability of the recommended transactions "on behalf of" the lender under s.140A(1)(c). At trial, the court held that any failures by the broker to carry out a proper assessment were not acts done "on behalf of" the lender and thus the lender incurred no responsibility. The Court of Appeal allowed Mrs Plevin's appeal taking a broad interpretation of s.140A(1)(c).

[Amethyst]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

http://www.legalbeagles.info/forums/...-Horse-Limited

breakdown a bit on original judgment that was appealed

Main issues


Whether the approach in Harrison v Black Horse [2011] EWCA Civ 1128 is correct. Is the court prevented from finding the existence of an unfair relationship under s.140A of the Consumer Credit Act 1974 if there has been a breach of a regulatory rule in the conduct complained about?

Whether an independent broker acts "on behalf of" a lender for the purposes of s.140A(1)(c) of the Consumer Credit Act 1974 when the broker arranges a loan and insurance.

[mystery1]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

I have to wonder if the CoA has ever had dissent of it's own judgement handed out so publicly and vociferous by it's own judges as there was in this case with respect to Harrison, a case with which even the claimant gave up before the supreme court got it's hands on it.

LJ Briggs "In so concluding, I do not mean thereby to express any sense of comfort about the principle laid down in the Harrison case. If I had been free to do so, I would have regarded a visceral instinct that the relevant conduct was beyond the Pale as a persuasive starting point in the analysis whether such conduct gave rise to an unfair relationship, all the more so where, as the report of the Competition Commission makes plain, the standards imposed at the time by the regulatory authorities manifestly failed to prevent the abuse of point of sale single premium PPI, to an extent that it has since become a national scandal, and has been prohibited for the future. But these are questions which must be addressed, if at all, in the Supreme Court."

LJ Moses "This is a dispiriting conclusion. It means that, until the principle identified in Harrison is re-examined, compliance with those Rules excuses a deliberate decision not to disclose commission, taken in circumstances where the creditor appreciated that to do so would make it unlikely that the debtor would purchase a single premium PPI policy. That this was the reason for the decision taken is made clear in the internal documents to which the Recorder drew attention (Judgment [51] and [71]-[80])."

"I see no point, however, in dissenting in the light of my hope that the Supreme Court, if your lordships agree, will consider this court's decision in Harrison. My dissent is not going to make such consideration any more likely in light of the fact that when its reliance on ICOB last appeared under threat, following the Supreme Court's grant of permission in Harrison, Black Horse paid the amount at stake and costs in full. It seems a pity that a concession (recorded at [59]) which only appears to have been made "ultimately", deprives this court of the opportunity to express its support of the Recorder's judgment in answering the question which the statute poses: was the relationship arising out of the agreement unfair? The value judgment which the statute requires the court to make can hardly be described as visceral, even in circumstances where the facts are in danger of arousing indignation. Even Mr Hodge Malek QC's measured and persuasive advocacy, on behalf of Mrs Conlon, was unable to restrain a certain sense of impotence at the inability of this court to support what appears to me to have been the Recorder's own unimpeachable conclusion based on all the facts."


M1

[Sparkie1723]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

My logical view on this ......not that its worth anything..but if the lender receives commission by way of the negotiations of the broker with the insurance company, and the insurance company pay the lender direct then that is a " Back hander" a " Bung "......the broker could be said to be receiving letitimate commission as agent for the Insurance company...........the lender gets a " Back hander"
Shipman v Broadway stated .......".It is not the payment of the money its the secrecy of it"

Sparkie
Take no real notice if my ramblings

I know nothing Mr Fawlty:tinysmile_grin_t:

[mystery1]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

http://www.39essex.com/resources/new...ing.php?id=421

Conlon was settled too.

http://www.bailii.org/cgi-bin/markup...method=boolean

Harrison.

M1

[Amethyst]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

Wonder why Plevin wasn't settled ? Weaker case ?

[mystery1]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

Different lender.

Not Blackhorse but Paragon.

M1

[Amethyst]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

Mmm I know, would seem wiser to settle though rather than risk it ?

What's the potential for Unfair Relationship in PPI cases off the back of this then ?

[mystery1]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

Bit like bank charges in the SC. Game on for the wee people or you'll need a very novel argument to overcome it as all cases will be purged.

The judicial comments indicate a good chance of a victory but alas one never really knows.

M1

[Sparkie1723]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

Different lender.

Not Blackhorse but Paragon.

M1

Owned by my " Cowboy" friends Allchemy/Swift.
Sparkie

[righty]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

Wonder why Plevin wasn't settled ? Weaker case ?

Miller Gardner Solicitors are acting for the claimants. I understand Conlon was settled because the lender didn't want to set a precedent.

Also from the day of its inception Harrison has always been considered bad law. Not one person I've spoken to has said anything else other than it was an appalling judgement

[Amethyst]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

Plevin (Respondent) v Paragon Personal Finance Limited (Appellant)

• Judgment (PDF)
• Press summary (PDF)

PRESS SUMMARY
Plevin (Respondent) v Paragon Personal Finance Limited (Appellant) [2014] UKSC 61
On appeal from [2013] EWCA Civ 1658
JUSTICES: Lady Hale (Deputy President), Lord Clarke, Lord Sumption, Lord Carnwath and Lord Hodge

BACKGROUND TO THE APPEAL
Payment protection insurance (“PPI”) is sold to borrowers to cover the repayment of specific borrowing on the occurrence of an insured event, such as accidental injury. PPI used to be sold to borrowers as part of a package with the loan itself, with a single premium paid upfront and added to the amount borrowed. A high commission would be paid to intermediaries.
Mrs Plevin took out a personal loan through LLP Processing (UK) Ltd (“LLP”). LLP proposed that she borrow £34,000 from Paragon Personal Finance Ltd (“Paragon”), repayable in instalments over ten years, and that she take out PPI for five years with Norwich Union, Paragon’s designated insurer. The PPI premium of £5,780 was payable at the outset and added to the amount of the loan. 71.8% of the premium was taken in commission: LLP retained £1,870 and Paragon retained £2,280. The Financial Industry Standards Association guide which LLP gave to Mrs Plevin told her that “commission is paid by the lending company”, but she was not told the amount of the commission or the identity of the recipients.

Sections 140A to 140D of the Consumer Credit Act 1974 apply to Mrs Plevin’s loan and PPI. They allow a court to reopen a credit agreement which is unfair because of any of the terms of the agreement or a related agreement, the way in which the creditor has exercised or enforced his rights, or “any other thing done (or not done) by, or on behalf of, the creditor” (s 140A(1)(c)). Mrs Plevin argues that the relationship between herself and Paragon was unfair under s 140A(1)(c) because of (i) the non-disclosure of the commissions and (ii) the failure of anyone involved to advise on the suitability of the PPI for her needs. Insofar as LLP committed these defaults, she says it did so “on behalf of” Paragon.

The Insurance Conduct of Business Rules (“ICOB Rules”) are the statutory rules which regulate the insurance industry. They do not require insurance intermediaries to disclose commissions to their customers. They do require an insurance intermediary which makes a “personal recommendation” to a customer to buy an insurance contract to take reasonable steps to ensure that the recommendation is suitable for the customer’s demands and needs.

Both the Manchester County Court and the Court of Appeal held that the non-disclosure of the commission by LLP and Paragon and the failure by Paragon to assess the suitability of PPI for Mrs Plevin did not make the relationship unfair, because they were bound to do so by Harrison v Black Horse Ltd [2012] Lloyd’s Rep IR 521, where the presence or absence of a regulatory duty under the ICOB Rules had been treated as conclusive. The Court of Appeal in this case also held that LLP’s failure to conduct a needs assessment of Mrs Plevin, in breach of the ICOB Rules, was something done “by or on behalf of” Paragon which made its relationship with Mrs Plevin unfair.

The Supreme Court of the United Kingdom
Parliament Square London SW1P 3BD T: 020 7960 1886/1887 F: 020 7960 1901 www.supremecourt.uk


JUDGMENT
The Supreme Court unanimously dismisses the appeal, but for reasons different from those given by the Court of Appeal. Lord Sumption delivers the sole judgment. He holds that the non-disclosure of the amount of commissions and the identity of the recipients did make Mrs Plevin’s relationship with Paragon unfair under s 140A(1)(c) of the Consumer Credit Act 1974, but the failure to conduct a needs assessment of Mrs Plevin did not. The case is remitted to the Manchester County Court to decide what if any relief under s 140B should be ordered unless that can be agreed.

REASONS FOR THE JUDGMENT
The non-disclosure of the commissions
 The Court of Appeal’s decision in Harrison v Black Horse Ltd [2012] Lloyd’s Rep IR 521 was wrong. The ICOB Rules are hard-edged, imposing a minimum standard of conduct applicable in a wide range of situations and providing for damages in the event of breach, whereas s 140A of the Consumer Credit Act 1974 introduces a broader test of fairness which is a matter for the court’s judgment and which potentially takes into account a much wider range of factors. They are asking different questions [14-17].

 Applying s 140A, Lord Sumption concludes that the non-disclosure of the commissions did make the relationship between Paragon and Mrs Plevin unfair. At some point, the commissions may become so large that the relationship cannot be regarded as fair if the customer is kept in ignorance. This case lay far beyond the tipping point. Mrs Plevin would have questioned whether the PPI represented value for money if she had been aware of the commission amounts and might not have taken out PPI at all [18]. This unfairness was the responsibility of Paragon, the only party which knew the size of both commissions [19-20].

Failure to assess the suitability of PPI insurance for Mrs Plevin’s needs

 Paragon’s own failure to conduct their own needs assessment of Mrs Plevin did not make its relationship with her unfair. The absence of a regulatory duty under the ICOB Rules was not conclusive, but it was highly relevant: Paragon could not reasonably be expected to perform a duty which the relevant statutory code assigned to someone else, namely LLP [26].

 LLP’s failure to conduct a needs assessment of Mrs Plevin could not be treated as something done “by or on behalf of” Paragon, because LLP was not acting as Paragon’s agent. The ordinary and natural meaning of the words “on behalf of” imports agency, and that is how the courts have ordinarily construed them. Nothing in this case demands a broader interpretation. The phrase “by or on behalf of” suggests that the act or omission must be done by the creditor itself, or by someone else whose acts and omissions engage the creditor’s responsibility as if the creditor had done or not done it itself. Further, the Consumer Credit Act 1974 makes extensive use of the technique of imputing responsibility to the creditor for the acts or omissions of other parties who are not (or not necessarily) the creditor’s agents, including in s 140A(3), and when it does so, it does so in clear terms. Finally, there would be no coherent criteria for determining what connection other than agency would be required between the creditor and the acts or omissions causing the unfairness [27-34].

References in square brackets are to paragraphs in the judgment
NOTE
This summary is provided to assist in understanding the Court’s decision. It does not form part of the reasons for the decision. The full judgment of the Court is the only authoritative document. Judgments are public documents and are available at:
http://supremecourt.uk/decided-cases/index.shtml

[mystery1]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

https://www.supremecourt.uk/decided-...essSummary.pdf

https://www.supremecourt.uk/decided-...7_Judgment.pdf

M1

[righty]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

http://www.39essex.com/resources/new...ing.php?id=421

Conlon was settled too.

http://www.bailii.org/cgi-bin/markup...method=boolean

Harrison.

M1

Yes much to the claimant solicitors disappointment .......allegedly

[righty]

Re: Unfair Relationship CCA Judgment due 12 Nov 2014 Plevin v Paragon – The Supreme

http://www.39essex.com/resources/new...ing.php?id=421

Conlon was settled too.

http://www.bailii.org/cgi-bin/markup...method=boolean

Harrison.

M1

Yes much to the claimant solicitors disappointment .......allegedly