IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
MOLD DISTRICT REGISTRY
HHJ Chambers QC :
1. This action concerns a number of issues that relate to the question of whether or not the balance said to be due on a credit card issued to the Claimant by the Defendant under an agreement made on or about 2 October 2003 (“the agreement”) is recoverable from her.
2. The parties have cooperated in admirable fashion at reducing the original number of issues in the light of developing authority. This judgment will address the remaining ones in the order in which they came before me.
Were the terms and conditions of the agreement sent to the Claimant?
3. Although not one of the listed issues, the Defendant was content for the question to be raised and ruled upon.
4. The question is whether, at the same time that the Claimant received the acceptance form that she undoubtedly signed, she also received a copy of the Defendant’s terms and conditions.
5. The Claimant gave evidence. She was a pleasant straightforward witness.
6. The Claimant was shown a copy of the covering letter from the Defendant that the Defendant says would have been sent to her (TB/5/b/381). She said that she had not seen a letter like that before. She was shown the form of agreement that she would undoubtedly have signed and returned (TB/5/b/383). She said, “It rings bells”. She was shown the type of direct debit form that she would also have returned to the Defendant (TB/5/b/385) and that also rang bells. However the copy of the relevant terms and conditions (TB/5/b/386) rang no bells. Thus the two documents that the Claimant would have returned to the Defendant rang bells but those that were sent to her for her retention did not. If those documents were not sent, she would have received merely the agreement and the direct debit form. There would have been no covering letter.
7. In cross-examination, the Claimant explained how this was her first successful application for a credit card. Before then she had had a debit card and had made an unsuccessful application for a credit card. At the time in question she had moved home and she kept everything that concerned her financial affairs. She was very frank about what she did and did not read online when making her application. In effect, she read what was necessary to the application and ignored the rest. She knew that she could read the terms and conditions online should she want to. She didn’t read the agreement but simply signed and returned it in the envelope that had been provided together with the direct debit form. The need to look for the documents arose when she stopped paying under the agreement in 2008 due to financial difficulties. She was confident that, if she had been sent the terms and conditions, she would have kept them.
8. If the Claimant is right in saying that she did not receive the terms and conditions, the agreement is irredeemably unenforceable.
9. The Defendant called Sarah Shephard to give evidence. She is a card product manager employed by the Defendant. Ms Shephard was not directly involved with the matters in question but was able to give clear evidence as to the process that would have been involved leading to the issue of the Claimant’s card. She also gave evidence as to the manner in which the pack of what it was said would have been sent to the Claimant was compiled.
10. After extensive questioning it appeared that it was accepted that the documents in the trial bundle reflected the then current situation and, in any event, I accept that to have been the case.
11. I further accept that, at the time in question, the Defendant operated a system that automatically considered requests for cards and, if the computer said “yes”, generated the documents that constituted packs that appear to have been assembled and posted manually. Thus, if there was a mistake by the Defendant in putting the pack together, the reality must be that it occurred at the manual stage.
12. Of course mistakes do happen. However, in this case I do not think that there was one. I think that the chances are against someone having sent to the Claimant the mere three pages that needed to be returned and leaving out the further six pages that should also have been sent. I am further struck by the fact that it is the Claimant’s case that she got what she had to return but received neither of the two documents that were hers to keep. To this may be added the fact that it was only several years later that the Claimant first had to consider the matter although I readily accept that, once something has been put into a filing system, it takes an act of will to remove it.
13. Thus, despite the Claimant’s obvious honesty, I think that she was mistaken.
Was the credit limit shown?
14. This issue and those following will involve reference to the Consumer Credit Act 1974 (“the CCA”) and to the Consumer Credit (Agreements) Regulations 1983 as amended (“the CCAR”).
15. Section 61(1)(a) of the CCA provides that:
“(1) A regulated agreement is not properly executed unless –
(a) A document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or on behalf of the creditor or owner, …”
16. Section 10(2) of the CCA provides:
“In relation to running-account credit, “credit limit” means, as respects any period, the maximum debit balance which, under the credit agreement, is allowed to stand on the account during that period, disregarding any term of the agreement allowing that maximum to be exceeded merely temporarily.”
17. Paragraph 3 of Schedule 6 of the CCAR requires the credit agreement to contain “a term stating the credit limit or the manner in which the credit limit will be determined or that there is no credit limit”.
18. Paragraph 8 of Schedule 1 of the CCAR provides that the credit limit may be expressed as “(a) a sum of money; (b) a statement that the credit limit will be determined by the creditor from time to time under the agreement and that notice of it will be given by him to the debtor; (c) a sum of money together with a statement that the creditor may vary the credit limit to such sum a he may from time to time determine under the agreement and that notice of it will be given by him to the debtor”. Each provision is discrete.
19. The agreement (TB/4/a/145) stated:
“3. Limit We will tell you from time to time the Approved Limit we have set and, if different, the Individual Limit which you have chosen for the Account.”
- The question is whether the words in the agreement related to a credit limit as defined by section 10(2). Mr Pugh, counsel for the Claimant, submitted that they did not. He submitted that the mere word “limit” in the agreement coupled with references to an “Approved Limit” and to an “Individual Limit” created an unacceptable degree of confusion.
- I disagree. I think it entirely clear that the word “limit” in the agreement was uniquely a reference to the credit limit. I also think it to be clear that the Defendant was to determine the credit limit whether by setting it without the Claimant’s involvement or by setting it with the Claimant’s involvement and that the Claimant would be notified accordingly. It was beyond sense for anyone reading the words to think that it would be open to the Claimant to set herself a limit higher than that approved of by the Defendant.
- In other words the agreement contained a term stating the manner in which the Claimant’s credit limit was to be determined and the credit limit was expressed as a statement that the credit limit would be determined by the creditor from time to time under the agreement and that notice of it would be given by the Defendant to the Claimant.
- It seems to me that the authorities with which I have been generously provided add neither limitation nor complication to what is intended to be a straightforward exercise from which the consumer is intended only to benefit where there is a real potential for confusion or other departure from the statutory requirements. Neither is the case here.
Did the agreement contain a term stating the rate of interest on the credit to be provided under the agreement in accordance with paragraph 4 of Schedule 6 of the CCAR?
- Paragraph 4 of Schedule 6 of the CCAR provides that the agreement must contain, “a term stating the rate of any interest on the credit to be provided under the agreement”. Paragraph 10 of Schedule 1 is to the same effect.
- Clause 4 of the agreement (TB/4/a/145) reads:
“4. Interest and Credit Charges We will charge interest:-
4.1 – on Purchase and Transferred Balances put on the account until 1 March 2004 at a monthly rate of 0% fixed until 1 March 2004. and thereafter at a monthly rate of 1.093% 12.3% APR; and otherwise at a monthly rate of 1.093%. 13.9%APR
4.2 Unless you are an existing Egg Customer we charge a handling fee of 1.25% of the amount of each Cash Advance (minimum fee £2.00). The APR for cash advances is 16.3%.
4.3 We charge a handling fee of 1.5% of the amount of each Credit Card Cheque (minimum fee £2). The APR for Credit Card Cheques is 16.3%.
4.4 We will charge interest on Promotional Balances at the interest rates and for the period we advise you of in the details of the Special Promotion.
In working out APRs, we have ignored any changes we may make to the interest rates, handling fees or any other charges which we introduce or vary at any time by giving you notice under condition 12.”
26. Mr Pugh’s submission, beautifully made, is essentially to the effect that the provision is too confusing to stand. However, at paragraph 16 of his skeleton argument in reply he says, “It has never been suggested by the Claimant that interest and APR are the same thing”.
27. I take the above assertion to mean that there is no suggestion that there can be confusion to the effect that interest and APR are the same. Self-evidently from the figures set out in the provision, they are not. Sub-clause 4.1 shows the same interest rate as yielding different APRs in differing circumstances and APRs which differ from rates that are described as “interest rates”.
28. The submissions therefore largely focus on the use and meaning of the word “otherwise” in sub-clause 4.1.
29. Mr Atrill, counsel for the Defendant, says that “otherwise” means that which is not a purchase or transferred balance put on the account on or before 1 March 2004. Thus it covers cash withdrawals whenever made, cheques whenever cashed and purchases and transferred balances going onto the account after 1 March 2004.
30. Mr Pugh submits that this is not the clear meaning of sub-clause 4.1 which carries the decided possibility that it is confined to purchases and transferred balances, the distinction being between those that pre-date 1 March 2004 and those that come afterwards. The semicolon that precedes “and otherwise” can hardly be regarded as determinative of a state of affairs to be construed by the card using world at large.
31. Regardless of the semicolon, it seems to me that certain factors militate decisively against Mr Pugh’s submissions. The most important of these is that on no reading are specific rates of interest dealt with in any other part of the clause.
32. The 1.25% handling fee in sub-clause 4.2 is obviously a single flat rate that will never be less than £2.00. It is not and could not be construed as an interest rate, not least because there is no period to which ‘the rate’ could be applied. The APR of 16.3% is not an interest rate.
33. Save that the fee is 1.5%, exactly the same comments can be made in respect of sub-clause 4.3.
34. Thus nowhere in clause 4 (or elsewhere in the agreement) is there a provision that can compete with sub-clause 4.1 as a statement the interest rate in respect of any potentially relevant transaction.
35. Although, on the Defendant’s case, it is only sub-clause 4.1 that deals with specific rates of interest, sub-clause 4.4 is devoted to interest and the closing words of the clause also refer to interest. It is therefore not inappropriate for the whole clause to be introduced with the words, “We will charge interest :-’’.
36. However, on its full reading, sub-clause 4.1 must provide, “We will charge interest on Purchase and Transferred Balances put on the account until 1 March 2004 at a monthly rate of 0% fixed and thereafter at a monthly rate of 1.093% …and otherwise at a monthly rate of 1.093% …”.
37. Without more, I do not see why the words “and otherwise” should not relate to all other transactions. If the remaining sub-clauses had provided for other rates of interest, I can see that the assumption might be displaced and confined to non-qualifying purchases and transferred balances. But given that other transactions were expressly dealt with elsewhere without reference to specific interest rates, it seems to me that the provision is clearly to the effect that the rate specified in sub-clause 4.1 is of comprehensive application.
38. The objection fails.
Is clause 5.1 unfair?
39. The relevant part of clause 5.1 reads:
“5. Repayments 5.1 Each month you must pay by direct debit at least the minimum payment given in your statement …”
- Clause 15.1 of the Terms and Conditions (TB/5/b/388) provides:
“15.1 We can end this Agreement by giving you not less than 30 days notice by post or e-mail. If there are exceptional circumstances we can end it without advance notice …”
- Clause 17.2 of the Terms and Conditions provides:
“17.2 If you do not do what you agree to do under this Agreement we may make the following charges to cover the additional cost caused to us:
- £2 for any payment made other than by direct debit, debit card or transfer from an Egg savings account.
42. Mr Pugh submitted that the combined effect of the above terms is to render clause 5.1 unfair as provided by regulation 5(1) of The Unfair Terms in Consumer Contracts Regulations 1999. The argument was summarised as follows:
“Any contractual requirement that you pay in a particular way with the consequence that, if you do not pay in that way, it will constitute a breach of the agreement is ipso facto made in bad faith.”
43. The generality of the submission is remarkable. Let me give an example. A cheque operates as a conditional payment. If a payee requires payment in cleared funds, is he ipso facto acting in bad faith? I can see no reason in principle why a payee should not stipulate a normal method of payment as being the one by which payment is to be made. Furthermore, nowhere do I find in this case anything in the terms agreed by the parties under which the Claimant would have had to suffer summary determination of her agreement in the event that she paid otherwise than by direct debit. Indeed, despite the wording of Clause 5.1, it seems that she would avoid a £2.00 charge were she to pay by debit card.
44. I find some difficulty in thinking that a failure to pay by direct debit, be it never so many times, would constitute “exceptional circumstances” for the simple reason that the Defendant could, under a provision that has not been impugned, terminate the agreement for any or no reason by giving not less than 30 days notice.
45. Furthermore I reject any suggestion that a person who has signed up with a company whose universally known raison d’être is to operate online can complain at a requirement that her payments should be made by electronic means. In other words, I reject the suggestion that a consumer who has knowingly signed up for such a type of business model should then be entirely free to make payments outwith that model.
46. I can see no reason how the term in question can be complained of as unfair.
47. The above findings obviate the need to address any further issues.
48. The claim fails.
49. No one need attend the handing down of this judgment. All consequential matters will be dealt with at a time and in a manner convenient to the parties at a hearing which will be an adjourned hearing of the hearing at which judgment is handed down. Any relevant time limit will be extended until then.