A point of interest that arose today

I often post here about the misinformation floating around online, and the errors that people make in assuming things concerning Consumer Credit Law, however a series of events today made me decide to post this article.

I was presented with an argument about enforceability which was badly wrong. Well in fact a number of points were incorrect.

Error 1) If a bank or creditor cannot provide the original credit agreement then they cannot enforce the agreement in Court. Also if they don’t have the original then they cannot reconstitute the agreement.

This is incorrect. Even going back to Wilson v First County Trust (2003) UKHL 40, the Lords said that there must have been an agreement, signed by the debtor, however the Lords did not say that if the bank doesn’t have this agreement then they cannot enforce. There have been a series of judicial rulings which address this point.

HHJ Langan in Lloyds TSB vs Mitchell that the creditor did not have to produce the original signed agreement, he pointed out cases such as the Iron Mountain fire where thousands of credit agreements were burnt and pointed out that if the creditor lost his agreement because of the fire, then it would produce an absurd result that would have left the creditors unable to enforce compliant and enforceable credit agreements. That was never the intention of the Consumer Credit Act 1974.

In Carey v HSBC Bank Plc HHJ Waksman QC made it clear that the creditor does not need the original agreement to produce a true copy, he can rely on records held in computers and other sources to produce a true copy of the agreement, the only caveat is that the copy must be honest and accurate.

The Courts have also set down some guidance on the issue of unenforceabilty and who shares the burden of raising such arguments relating to unenforceabilty. In HFO Services vs Kirit Patel HHJ Platts made it clear where a debtor wishes to raise an allegation of unenforceability, he cannot just say “its unenforceable guvnor” he needs to say why. For example, its unenforceable because the amount of credit is misstated and therefore a prescribed term is missing and therefore the agreement does not comply with s61(1)(a) Consumer Credit Act 1974.

So what if you don’t have the original agreement? well the burden does rest on the debtor to make a positive assertion about the original agreement, as the law stands , unless the debtor is able to make a positive assertion that the agreement was unenforceable because….. or that there never was a signed agreement…………………….(Please note: This only applies for agreements signed before 6th April 2007) then it is going to be very difficult to challenge the enforceability of the credit agreement.

I would also point out that no where in the 1974 Act does it state the “Original actual signed piece of paper” must be brought to the Court. It would no doubt be accepted by the Court if a member of staff working for the bank in their archiving department gave evidence that there was a credit agreement recorded on the banks archives, and that the type of credit agreement in use at that time was “X” and the computer records show that “X” % rate of interest would have applied and the credit limit was “£XXXXX”. The Court is likely to accept such evidence unless there is a positive assertion coming from the debtor as to what he did or did not sign. Now i would also point out that making a positive assertion that you didn’t sign an agreement when you know you did, is not only likely to get found out and make you look foolish, if you make such an assertion in a Defence and sign such with a statement of truth knowing it isn’t true, then you may well end up facing contempt of court too.

That said, there are often ways of proving the agreement the bank says is a “true copy” is in fact not a true copy. I have developed this skill over the years, and have been successful on a number of occasions in proving that the “true copy” provided by lenders isnt.

Error 2) Improper execution is not the same as unenforceable when dealing with s61 and 127(3) Consumer Credit Act.

This error was argued before me today. If an agreement is unenforceable, then it is unenforceable because the agreement fails to comply with s61 Consumer Credit Act, s61 clearly states an agreement is “improperly executed unless……..” if we then turn to s65(1) Consumer Credit Act 1974 we find that an “improperly executed agreement is only enforceable by order of the Court”

If we look at s127(3) Consumer Credit Act 1974 which has now been repealed, that states

127(3) The court shall not make an enforcement order under section 65(1) if section 61(1)(a)(signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner).

So, we say unenforceable but to use the term improperly executed would lead to the same conclusion.

The Jackson Reforms… a month on………….

Well its nearly a month since the wonderful Government brought in the amendments to the CPR which hit among other things the recoverability of successfees under no win no fee agreements.

Obviously, the initial thoughts were that consumers would face difficulties in obtaining access to justice and while this will undoubtedly be true for Claimants wishing to pursue a personal injury claim as they would now have to pay the successfee from their damages, for our clients it is not as bad as we first thought.

It is true that we are now more strict with the criteria of cases we take on, but the reality of it is that we are still taking cases on no win no fee, and while the client will now have to pay any success fee, we are not obliged to charge the Client a successfee at all if we dont want to and we are taking a flexible approach with clients and are happy to allow payment over a period of months where the case warrants it.

I must confess i did  think that the firm would cease taking on no win no fee cases, however, clearly i was wrong and the Jackson reforms, while more challenging are not a reason to stop taking cases on no win no fee.

Also, statutory demands are unaffected by these reforms, so we can still recover the successfee from the opponent, so cases involving bankruptcy are not affected at all.

I must say that Kerry Underwood of Underwoods solicitors was right when he said that the reforms are not as bad as some people thought they would be.

And s77-79 Consumer Credit Act 1974 is still causing the credit industry problems.

In May 2011 i took part in an interview with Ian Pollock from the BBC. Ian also interviewed Raymond Cox QC who is a leading expert on banking and finance law.

In that interview, i predicted that the banks were facing a big problem, Ray Cox QC also agreed with this view. Interestingly the Credit Services association Chief Exec Peter Wallwork was quoted as saying “Debt purchasers are not waking up and suddenly finding they have a problem on their hands,” and he apparently denied that lenders had a problem.

If that was correct, then it would be fair to say that i would be out of work by now, as plainly if the banks and creditors were not facing a problem then they wouldn’t lose in court, my firm wouldn’t win, and we would all be out of business. I’m sure that is the lenders wish, but sadly it isn’t whats happening.

On 4th March 2013 a Court heard a case involving a loan agreement. The agreement wasn’t that old, and the bank shouldn’t have had any problem producing a copy of the agreement, if of course their records were good and reliable. However, as was proven in Court before a Circuit Judge, their records fell down badly.

The Defendant made a request under s77(1) Consumer Credit Act 1974 for a copy of the loan agreement, it was a request made so that the Defendant could ascertain the terms of the agreement and to satisfy herself that the bank was entitled to take certain actions and to levy certain charges on to the account.

The first copy produced, was grotesquely illegible, it was ridiculous given that this was a bank who plainly knew what the law said about legibility, to make the point even the banks barrister said in court that no one could say this document was legible!!. It never ceases to amaze me that a bank would send out something which plainly could not be read, i mean what is the sense in doing that? what does it achieve? how does it assist anyone?

The bank then took legal action against the customer, despite failing to provide the documents which it was obliged to provide, and i pause for a moment to also point out that the bank also had a duty to provide documents under the Civil Procedure Rules Pre Action Protocols, so there was a double failing on the banks part.

I actually lost count of how many attempts the bank took at complying with what seemingly is a straight forward piece of legislation. If one reads the BBC interview you would think that the banks had no issues with complying with these s77 – 79 requests.

Everytime the bank sent a copy of the agreement, there were faults, faults so obvious Stevie Wonder on a galloping horse could have seen them clearly. I highlighted that the documents did not comply, yet this was seemingly ignored, in fact on one occasion the bank said, in the hope that a line can be drawn under this particular issue…… and they enclosed the same documents, with the same glaringly obvious errors.

When the case came to Court, the banks barrister ran a rather novel argument that the errors were errors which would have featured in the original signed agreement. The client recalled the document she signed and was adamant that what was produced wasnt it. Also, it seems to have escaped the bank that in running its argument that the errors were present in the original meant that the lawyers who drafted the contract must have been incompetent to write in these errors, further they were incompetent in not proof reading. Then, the printers also were incompetent in printing such a document with such glaring errors, and not proof reading, then, the bank and its agents must also have been incompetent as they sent out a credit agreement riddled with errors. And as the Judge who was alive to all the issues pointed out, no one at the bank had picked up on these errors for nearly 7 years until a customer of the bank pointed them out. Plausible? i think not, and the Judge agreed with that point of view, and dismissed the Claim.

But this isn’t the only case which i have dealt with that has fallen over on s77-79 Consumer Credit Act 1974. I dealt with a claim two weeks prior, where a large debt purchaser could not provide a true copy of the Defendants credit agreement. The judge on that case also dismissed the Claim and found for my client on all points taken.

Then there is the cases which don’t get to trial, many get abandoned when the creditors find they cannot comply with s77 – 79.

I remain of the view that the lenders have a headache facing them, certainly from the documents i see being put forward as “true copies” i am often able to find fault, whether it is a phone number that was not in use, or an address that wasn’t in use, or a rate of interest that wasn’t used until a year later or late payment charges which didn’t apply at the point the agreement was executed,the devil is in the detail.

I wonder if the credit services association would stand by their view some two years on or whether they will finally accept that lenders do have a problem.

Consumer Credit Litigation

I was emailed a link to a website belonging to a firm of solicitors whom i am acquainted with via a number of successful litigations.

Their website can be found here http://turnbullrutherford.com/services-consumer-credit.asp

I note that they suggest a litigation review is necessary and they are entirely correct. Many creditors and their lawyers are quick to issue claims, but slow to check they have the evidence necessary to discharge the burden placed upon them by the litigation.

I have taken a quote direct from the website, as it is very Apt indeed.

Some common themes arising in defences to claims for monies owed under consumer credit agreements are whether:

  • A creditor has complied with its duties under section 78 of the Act to provide a copy
    of the credit agreement;
  • A compliant default notice has been served on the debtor under section 87 of the
    Act enabling the entire sum to be repayable immediately and permitting termination
    of the agreement;
  • The credit agreement was executed in compliance with the Act and contained
    all the prescribed terms at the time of the debtor signing the agreement;
  • There was mis-selling of PPI policies or whether the debtor can establish a
    claim under the newly introduced unfair relationship provisions.

And here’s why its very apt!!!!!

HFO Capital limited v Denis Robinson- The Claimant represented by Turnbull Rutherford Solicitors failed before Deputy District Judge Bradly to satisfy the Court that section 78(1) Consumer Credit Act 1974 had been complied with
HFO Capital Limited v Michael Burney- The Claimant represented by Turnbull Rutherford Solicitors failed to satisfy the District Judge that the Default notice was compliant with s87(1) Consumer Credit Act 1974. The Court ruling is on BAILII and can be found here http://www.bailii.org/ew/cases/Misc/2011/23.html

HFO Capital Limited v Roland Wegmuller- The Claimant represented by Turnbull Rutherford Solicitors failed to satisfy the Recorder Campbell at Birmingham County Court that the agreement contained the prescribed terms required by s61(1)(a) Consumer Credit Act 1974. I was the fee earner for this case too. The Judgment is here http://www.bailii.org/ew/cases/Misc/2012/19.html

So, yes, the above cases show that without a proper and adequate litigation review, it will be very costly if it goes wrong for the creditors, and quite rightly, if you bring a claim rife with errors, you deserve to be punished in costs when the Defendant exercises his or her right to a Defence and wins.

Restons Solicitors article on HFO Capital Limited v Wegmuller.

I was trawling the net the other day and i was fortunate (although Restons may disagree here) to find the Restons website.

I must say a nice looking site, however, its a pity about the Wegmuller report, because its wide of the mark. The author clearly has not given sufficient attention to the Judgment of Recorder Campbell.

In the case of HFO Capital Limited v Wegmuller, Mr Recorder Campbell considered the allegation by Mr Wegmuller that the Barclaycard agreement (subsequently  acquired by HFO)  he signed in the mid-1990’s failed to contain the prescribed terms and therefore did not comply with Section 61 of the CCA.  After making reference to “Carey v HSBC Plc” – in particular those passages which dealt with what the Act required the customer to sign – the Recorder noted the court had not been provided either with a copy of the original agreement nor a reconstitution of it.

That is entirely wrong. Before the Court were the following,

1) A copy of the signed application form.

2) Terms and conditions which clearly were provided with the card, in fact they stated that they were accompanying the card!!

3) a reconstitution of the agreement

None of which assist where the underlying agreement is unenforceable, clearly you cannot reconstitute to make a bad agreement good. As they say, you cannot polish a turd, if its a bad agreement, no amount of reconstituting can put it right!!!!

The problems with the case were not as the author of the Restons article suggests, and in fact i made an application to the Court prior to the hearing for an order that the Claimant do provide a reconstitution of the original agreement. The Claimant provided the disclosure, and the reconstituted agreement was entirely supportive of Mr Wegmullers views.

Although Mr Wegmuller actually acknowledged difficulty in recollecting exactly what he signed, the Recorder decided that in the absence of any direct evidence from either Barclaycard or HFO, as to account set up procedures/documentation, Section 61 compliance could not be proved.  Therefore the debt recovery claim brought by HFO was dismissed.

Ok, now its helpful to look at the Wegmuller ruling here.

14. I pause there for a moment. It is worth noting that none of those three terms is actually visible on the copy application form document in the bundle that was signed by the defendant on 25th March 1996.

Clearly Recorder Campbell found the prescribed terms were not on the application Mr Wegmuller signed. That was obvious, contrary to the authors assertion the agreement was before the Court, otherwise how did the recorder make such findings??

Worse was to follow as Mr Wegmuller had instructed a firm of solicitors who are well known for representing customers who wish to challenge their liability under  regulated agreements on the grounds of non CCA compliance.  That firm (and similar) will take comfort from this ruling – not least the award of costs made in their favour.

That Firm, what an amusing comment, it seems to be that they cant even bring themselves to mention our name, still anyone who reads the Wegmuller ruling will know who we are. I would also point out that every one is entitled to be legally represented, if the banks dont like losing money there is a solution, GET IT RIGHT- GET YOUR PAPERS IN ORDER and maybe even invest in lawyers who know about consumer credit law. On the point of costs, well yes, isnt it the case that costs follow the event? if the lender had won he would have wanted his costs surely? or would they be kind and say its ok dont bother paying? for goodness sakes , the mind really boggles. So yes, we won the case, yes we got paid, yes the client didnt have to pay his unenforceable debt and yes we were on a CFA so got an uplift.

Although perhaps a reflection of the quality of evidence before the Court in that particular case, the message is clear – when proceedings are defended, debt purchasers need to ensure that a litigation risk assessment is carried out on every “enforceability” case.  The reality is that for the purposes of both litigation and regulatory compliance they are an “extension” of the original lender.  Implementation of effective arrangements will ensure recoveries  are maximised and defeat/dissuade speculative and time-consuming challenges/defences.

With respect, i find it grossly insulting if the author is suggesting that Mr Wegmullers Defence was speculative. It was anything but. There were identified breaches of s61,62,63,78,86,87 Consumer credit Act. As for HFO Capitals Default notices one merely need read HFO Capital v Michael Burney which is on BAILII and can be found here
We have challenged that certain creditor before, and have at least 20 victories under our belts with them so if our defences are speculative the judges must clearly be missing something. As far as it goes, the failings were no the fault of our clients, they were the fault of the creditors and their stupidity in rushing off to court without making sure they had a case that was winnable. I have a wealth of rulings in the County Court and High Court also that supports the arguments i have used in cases such as Wegmuller, none of which can be called speculative.

On a closing point, i must remind myself of the words of the Vice Chancellor in the case of Wilson v First County Trust Ltd – [2001] 3 All ER 229 where Sir Andrew Morritt VC said

In effect, the creditor–by failing to ensure that he obtained a document signed by the debtor which contained all the prescribed terms–must (in the light of the provisions in ss 65(1) and 127(3) of the 1974 Act) be taken to have made a voluntary disposition, or gift,of the loan moneys to the debtor. The creditor had chosen to part with the moneys in circumstances in which it was never entitled to have them repaid;

It seems pretty clear that if a lender fails to jump through the hoops set down by the legislation then he deserves all the hassle he gets. Lets also not forget that many lenders DID Get it wrong over the last 20 years, and now their errors are coming to light to their detriment sadly.

Jones v Link Financail Limited

I often keep my finger on the pulse of High Court cases involving Link Financial Limited , especially after our victory against them in Harrison.

I came across a case today called Jones v Link. It was a very pleasing case indeed, as it torpedoes these debt purchasers who try to argue that they merely purchased the debt as an assignee and therefore the Consumer Credit Act does not apply to them.

Cabot were prime at doing this, as were Arrow Global, however the High Court has now ruled that the Assignee is the Creditor for litigation, therefore this “were not the creditor” argument is no more (unless there is a further Appeal of course in Jones)

So debt purchase companies, you do have to comply with the Consumer Credit Act, if a debtor makes a statutory request for a copy of the agreement under s78 CCA for example, and the agreement is live and not been terminated, then you cannot say you arent the creditor. And believe me, if you do on a case im involved with, ill slap a copy on Jones on the table quicker than you can say im not the creditor.

The case can be found here http://www.bailii.org/ew/cases/EWHC/QB/2012/2402.html

Hire purchase agreements and s90-92 Consumer Credit Act 1974

Over the past few months i have dealt with a number of hire purchase cases whereby the creditor has taken possession of protected goods upon a debtor breaching the terms of the agreement regulated by the Consumer Credit Act 1974.

Protected goods are goods that more than one third of the repayments due under the agreement have been paid. Where the debtor has paid more than the one third of the total repayments before repossession the creditor would need an order of the Court to be entitled to repossess the goods. It is worth visiting the relevant sections of the Consumer Credit Act

90 Retaking of protected hire-purchase etc. goods.

(1)At any time when—
(a)the debtor is in breach of a regulated hire-purchase or a regulated conditional sale agreement relating to goods, and
(b)the debtor has paid to the creditor one-third or more of the total price of the goods, and
(c)the property in the goods remains in the creditor,
the creditor is not entitled to recover possession of the goods from the debtor except on an order of the court.
(2)Where under a hire-purchase or conditional sale agreement the creditor is required to carry out any installation and the agreement specifies, as part of the total price, the amount to be paid in respect of the installation (the “installation charge ”) the reference in subsection (1)(b) to one-third of the total price shall be construed as a reference to the aggregate of the installation charge and one-third of the remainder of the total price.
(3)In a case where—
(a)subsection (1)(a) is satisfied, but not subsection (1)(b), and
(b)subsection (1)(b) was satisfied on a previous occasion in relation to an earlier agreement, being a regulated hire-purchase or regulated conditional sale agreement, between the same parties, and relating to any of the goods comprised in the later agreement (whether or not other goods were also included),
subsection (1) shall apply to the later agreement with the omission of paragraph (b).
(4)If the later agreement is a modifying agreement, subsection (3) shall apply with the substitution, for the second reference to the later agreement, of a reference to the modifying agreement.
(5)Subsection (1) shall not apply, or shall cease to apply, to an agreement if the debtor has terminated, or terminates, the agreement.
(6)Where subsection (1) applies to an agreement at the death of the debtor, it shall continue to apply (in relation to the possessor of the goods) until the grant of probate or administration, or (in Scotland) confirmation (on which the personal representative would fall to be treated as the debtor).
(7)Goods falling within this section are in this Act referred to as “protected goods ”.

91 Consequences of breach of s. 90.

If goods are recovered by the creditor in contravention of section 90—

(a)the regulated agreement, if not previous terminated, shall terminate, and
(b)the debtor shall be released from all liability under the agreement, and shall be entitled to recover from the creditor all sums paid by the debtor under the agreement.

92 Recovery of possession of goods or land.

(1)Except under an order of the court, the creditor or owner shall not be entitled to enter any premises to take possession of goods subject to a regulated hire-purchase agreement, regulated conditional sale agreement or regulated consumer hire agreement.
(2)At any time when the debtor is in breach of a regulated conditional sale agreement relating to land, the creditor is entitled to recover possession of the land from the debtor, or any person claiming under him, on an order of the court only.
(3)An entry in contravention of subsection (1) or (2) is actionable as a breach of statutory duty.

The above is pretty clear yes? so why do creditors get themselves caught out? well the difficulty Mr Creditor seems to have is, in the cases ive dealt with, they have tried to argue that the debtor returned the keys, thus consented to the repossession and therefore the one third rule et al is irrelevant.

However, while a debtor can indeed consent to enforcement under the act, when it comes to repossession of protected goods the consent must be “informed consent” and in the cases which i have dealt with, the consent was clearly not informed consent.

The Court of Appeal case of Chartered Trust v Pritcher makes it very clear that recovery of protected goods must be by informed consent. So what does this mean? In Pritcher, the debtor had not been made fully aware of his statutory rights before the vehicle was repossessed. Such as the right to keep the goods after more than one third of the repayments had been made and seek a time order from the Court. This right was not explained to Mr Pritcher and therefore his consent was not informed consent. While the Pritcher case was relevant to the Hire Purchase Act, the editors of Goode agreed that the case would apply to the provisions of s90  Consumer Credit Act .

Given the amount of defective Default notices that we see, there is no doubt that some lenders will face a real difficulty if they repo protected goods after one third of the repayments have been made without securing informed consent of the debtor. It is my view that a materially bad default which does not provide the debtor with statutory information required by the Consumer Credit Act could invalidate any consent that the debtor may have given, if he did so not fully aware of his rights.
I have already dealt with such a case where the client was entitled to a refund of all monies paid under the agreement because informed consent was not achieved.

HFO Capital Limited vs………………..

At the beginning of this year, i faced off against HFO Capital Limited. I say “i” faced off, that isnt true entirely as i was merely the file handler. It was my client Mr Wegmuller who faced HFO.
The Court found in Mr Wegmullers favour, and the judgment is in the public domain already albeit in a limited capacity, however on reflection it is an important ruling and therefore i have decided to post the ruling on my blog.



Priory Courts
33 Bull Street
B4 6DS

24th January 2012



HFO Capital Limited Claimant
Mr Roland Wegmuller Defendant


For the Claimant: Miss Margiotta

(instructed by Turnbull Rutherford, London)

For the Defendant: Mr Turner

(instructed by Messrs Watsons Solicitors, Llandudno)

Transcript provided by:
Posib, Y Gilfach, Ffordd y Pentre, Nercwys, Flintshire, CH7 4EL
Posib, DX26560 MOLD
Tel: 01352 757273
Fax: 01352 757252
No. of folios in transcript – Judgments: 59 / Proceedings: 62
No. of words in transcript – Judgments: 4280 / Proceedings: 4,441

JUDGMENT 24th January 2012

1. This is a claim brought by the claimant for monies allegedly owed by the defendant under a
credit agreement regulated by the Consumer Credit Act 1974. It is claimed that the credit
agreement was made between Barclaycard and the defendant in about June 2006. It
involved the provision of a credit card by Barclaycard to the defendant.
2. It is claimed that the debt was assigned from Barclaycard to the claimant and in this action
the claimant claims the principal sum of £7,246.06 plus contractual interest.
3. This has been listed before me as a one day Fast Track trial of the entire action. No doubt
it was allocated to the Fast Track because of the amount involved and the time estimate that
had initially been put forward by the parties. However, by the time that the papers were
fully prepared to trial and transferred overnight (last night) from Northampton County
Court to Birmingham County Court, it was clear to both parties, and indeed to me, that the
complexity of this case was such that if I were to try the entirety of the action, it would take
considerably more than one day.
4. Only this morning, I was provided with two lengthy, detailed and very helpful, skeleton
arguments, bundles of authorities running to over two hundred pages, and a bundle of
contractual and other documents running to nearly two hundred pages too. For that reason,
I was invited by the parties to try one preliminary issue today, namely the enforceability of
the credit agreement.
5. That invitation was extended to me on the grounds that if I were to try this preliminary
issue, it may mean the end of the case. Alternatively, it would enable the parties to take
stock and proceed further if so advised. So at the invitation of the parties, and because of
the clear lack of time, earlier today I agreed that I would try the preliminary issue of the
enforcement of the agreement.
6. It is the defendant’s case that this credit agreement is not enforceable on the grounds that
all of the prescribed terms within the meaning of the Consumer Credit Act 1974 were not
contained in the document signed by the defendant.
7. It is common ground that the only document signed by the defendant was a Barclaycard
application form signed with the date of 25th March 1996, to be found at page 41 of the trial
bundle. It is a very poor copy of the document and parts of it have been blacked out for
reasons that no one has been able to explain. Perhaps the other striking feature is that there
is no evidence before me from anyone, either from the claimant or Barclaycard of other
similar documents from the time for me to make a comparison, or any evidence of
Barclaycard’s system back in 1996. Miss Margiotta has rightly submitted to me that I
should not be too critical of the claimant in this regard and I should bear in mind how
difficult it is to obtain such evidence so many years after the event, and I have to say I have
some sympathy with Miss Margiotta in this respect particularly as she points out to me
these matters were only raised by way of criticism from the defendant relatively recently.
However, as against that, I have to deal with this matter on the evidence before me. In the
respects that I have identified that evidence is somewhat inadequate.
8. It is submitted by the defendant that if all of the prescribed terms are not contained in the
document itself, then that is fatal to the enforceability of the agreement, and it would not be
sufficient if, for example prescribed terms were sent a few weeks later with the credit card,
which is what the defendant suggests may have been the way that the terms and conditions
were provided. I therefore have to make a finding of fact on the balance of probability as
to whether the prescribed terms and conditions were contained in that document.
9. I have to make a finding of fact in the context of the relevant law, to which I have been
most helpfully referred by both counsel in this case by their informative skeleton
arguments and also by way of oral submissions. I turn to that law now.
10. I start at section 61 of the Consumer Credit Act 1974 that provides as follows:
“(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,”
And stress is laid there by the defendant on the need for the document itself to contain all
the prescribed terms.
11. I have been pointed to certain guidance on what is meant by the phrase “a document in the
prescribed form itself containing all the prescribed terms”, and I have been referred to the
case of Emma Carey v HSBC Bank [2009] EWHC 3417 and it is the judgment of His
Honour Judge Waksman QC, sitting as a Judge of the High Court in a case of first instance.
I am told by counsel, and I have no reason to suspect that this is wrong, that the principles
set out in that case have been followed in other subsequent cases, including cases of higher
authority. His Honour Judge Waksman QC said this in relation to the agreed principles in
this area (see paragraph 173):
“173. The parties in Carey have helpfully agreed the following principles. The fourth one
was added by Mr Uff, with their agreement. No other party takes issue with them.
The OFT has formulated the matter in a slightly different way but accepts these
principles are close to its position.
(1) It is not sufficient for the piece of paper signed by the debtor merely to
cross-refer to the Prescribed Terms without a copy of those terms being
supplied to the debtor at the point of signature;
(2) A document need not be a single piece of paper;
(3) Whether several pieces of paper constitute one document is a question of
substance not form. In particular a physical connection between several pieces
of paper is not necessary in order for them to constitute one document;

(5) Accordingly, where the debtor’s signature and the Prescribed Terms
appear on separate pieces of paper, the questions of whether those pieces of
paper together constitute one document is a question of substance and not
At paragraph 174, His Honour Judge Waksman QC said:
“174. As a matter of law, those principles appear to me to be correct, in the context
of s61.”
12. So, what are the Prescribed Terms that must be contained in the document as so defined in
section 61(1)(a) of the Consumer Credit Act 1974 and in Carey?
13. I now turn to the Consumer Credit (Agreements) Regulations 1983. It is common ground
that these were the Regulations in force in relation to this credit agreement and set out in
Schedule 6 are various Prescribed Terms that must be included and the three relevant ones
here are under Clauses 3, 4 and 5:
“Credit Limit
3. Agreement for running-account credit. A term stating the credit limit or the
manner in which it will be
determined or that there is no credit
Rate of interest
4. Agreement for – A term stating the rate of any interest on the credit to be
provided under the agreement.
5. Consumer credit agreements. A term stating how the debtor is to discharge his
obligations under the agreement to make the
repayments, which may be expressed by reference
to a combination of any of the following – …”
And “the following” deals with the repayment.
14. I pause there for a moment. It is worth noting that none of those three terms is actually
visible on the copy application form document in the bundle that was signed by the
defendant on 25th March 1996.
15. As to the effect of a failure to comply with those statutory obligations, I turn now to section
65(1) of the Consumer Credit Act 1974 that provides:
“An improperly-executed regulated agreement is enforceable against the debtor or
hirer on an order of the court only”.
16. However, it does not rest there because there was important additional statutory material on
this point that was in place in relation to this particular credit agreement (though since
repealed), because by Section 127(3) of the Consumer Credit Act 1974 it was provided
“The court shall not make an enforcement order under section 65(1) if section
61(1)(a) was not complied with unless a document, whether or not in the prescribed
form of complying with the regulations under section 60(1) itself containing all the
prescribed terms of the agreement was signed by the debtor or hirer whether or not
in the prescribed manner.”
17. In other words, the Court is precluded from making an order granting relief from the
infringement of the statutory conditions as to the enforceability if all of the prescribed
terms that I have identified above were not contained in the signed document itself.
18. So moving to the factual issue itself, I start briefly with a matter upon which I have
received some submissions, namely the burden of proof. In submissions the defendant
conceded that there was a prima facia case established by the claimant that there was a
credit agreement in place and therefore the evidential burden of proving the index factual
issue is upon the claimant. I was referred to a first instance case in the County Court of
HFO Services Limited v Kirit Patel. It was decided by His Honour Judge Platt on 20th May
2009. Of course, I accept that this is a first instance decision and is therefore only
persuasive. Nevertheless, I found the judgment of His Honour Judge Platt to be persuasive
in that way and I would wish to take the same approach.
19. His Honour Judge Platt said at paragraph 19:
“Therefore, in my judgment, when the defendant wishes to rely on section 65, several
consequences flow. First, it is not sufficient for him simply to allege that the
agreement is not properly executed. He must specify the particular breach or
breaches of the Regulation on which he relies. The burden of proving that the
agreement has been properly executed then rests with the claimant. It is his
obligation to put before the Court evidence which he considers sufficient to satisfy
the Court on this issue.”
20. Miss Margiotta on behalf of the claimant indicates that she has not had an opportunity to
consider or reflect upon the law in this area, because the above case was only produced by
the Defendant this morning, and she wishes to reserve her position. But she did indicate
also that she accepted that it was for the claimant to show the necessary factual matter on
the balance of probabilities.
21. On this factual issue, I have read and heard evidence on the claimant’s side of the case
from Mr Jonathan Titherley, who is a litigation paralegal for the claimant’s solicitors. I
have read his two statements and heard him give evidence. On the defendant’s side, I have
read the two witness statements of the defendant, Roland Wegmuller. I have also read
numerous documents, the principal ones being the application form signed by the
defendant on 25th March 1996 (to which I have already referred). Another document of
relevance is a current a blank standard form of Barclaycard’s terms and conditions put in
the bundle by the claimant, to be found at pages 43 and 44, and it is worth noting that on
that standard blank form, the relevant prescribed terms are included. Of course, the issue
for me is whether those terms and conditions were contained in the actual document that
was signed.
22. I have already observed that it is disappointing and makes it difficult for the Court without
further evidence from Barclaycard, and Mr Titherley says, and I entirely accept Mr
Titherley’s evidence, that his client asked for this information but for whatever reason, it
was not forthcoming, and therefore there are no similar documents of the time to compare
with this one. So although I accept Mr Titherley’s evidence generally, he was unable to
give any direct evidence on whether the application form actually contained the prescribed
forms, whether on the front, back or anywhere else.
23. Mr Wegmuller gave evidence on the matter. In his witness statement, he set out the
general circumstances in which he came to sign this agreement. He said that about six
months after he had come to the United Kingdom from Spain, he saw an advertisement in a
magazine and he recalled completing the document and posting it back to Barclaycard. He
said he recalled that the application was in the form of a glossy style fold-out pamphlet. In
his witness statement he said he recalled there was no other documentation with the
application form; certainly, there was no separate booklet of terms like those the claimant
has produced in the course of these proceedings.
24. Mr Wegmuller was honest enough to concede that he had certain difficulties with his
recollection of exactly what was on the form. This is perhaps not surprising given that he
was referring back to his recollection of some sixteen years ago, and it is true to say that
there were some slight fluctuations in his evidence that were quite properly referred to by
Miss Margiotta in her submissions. Nevertheless, his evidence taken as a whole, and that is
how I have to view it, was really to the effect that whilst he could not categorically say that
there were no further textual items on the document, either on the front or on the back, he
did not believe that there were significant additions to the document, and he did not believe
that there were the prescribed terms on the document for example on the back or in the
blacked-out spaces of it.
25. The impression that I formed of Mr Wegmuller was that he was a man who was doing his
best to give a truthful and accurate recollection of what he saw, and as I say, he conceded
that it would be difficult to be absolutely precise on that. But in general terms, I was
satisfied that he was a credible witness.
26. Miss Margiotta on behalf of the claimant has made a number of submissions to support her
proposition that on the balance of probabilities it is likely that the prescribed terms were on
the form. If I may summarise her submissions in particular those I regard as her strongest
27. Firstly, she submits that Barclaycard are and were a reputable large-scale organisation who
had in 1996 a legal department and a compliance department and therefore, in effect, it is
inherently unlikely that they would make the mistake of sending out an application form in
a magazine without the prescribed terms stipulated in the Regulations to which I have
referred, particularly as the Regulations has been in force for a number of years at that
28. That is a perfectly proper point for Miss Margiotta to make. However, it seems to me that
it would be wrong for me to place too great a reliance upon that, particularly as one knows
that there have been numerous more recent examples where financial institutions of similar
size have on occasions made errors in terms of compliance with their financial services
29. Secondly, and this is also a good and proper point to be made on behalf of the claimant, if
one actually looks at the form that was signed by Mr Wegmuller, difficult though it is to
make out, one part that is plain if one looks carefully, and Mr Wegmuller agreed this, is
that he did sign a caption stating that:
“This is a Credit Agreement regulated by the Consumer Credit Act 1974. Sign only
if you wish to be bound by the terms of the agreement.”
30. Miss Margiotta submits that this sentence having been signed by the defendant (and it is
not suggested by the defendant that he had difficulties with the English language, although
he is of course of Swiss nationality originally), the likelihood is that there would have been
“some” terms and conditions somewhere on that document otherwise he would not have
signed this. However, the mere fact that there may not have been such terms and
conditions on the face of the document may not necessarily have been a critical factor in
the decision whether or not to sign this application form. The evidence that he gave was
that what was at the forefront of his mind was obtaining a credit card, rather than the detail
of the terms and conditions, which of course is something of a two-edged sword.
31. In my judgment, those were the strongest submissions. However, I do not accept that
those factors are conclusive.
32. I am satisfied on the balance of probabilities that the application form signed by the
defendant did not contain the three prescribed terms to which I have referred, and I come to
that conclusion principally for these reasons.
33. Firstly, I look at the document itself; the application form. That is the best evidence that
the claimant has been able to provide in terms of the documentation. Quite simply, there is
no reference whatsoever to any of those three prescribed terms that are required. It is
submitted that I should infer that it is more probable than not that they would have been
there, either in the blacked-out areas or on the back. I am afraid there is quite simply
insufficient evidence to enable me to draw that inference. And I repeat that matters may
have been very different if further and better evidence had been produced, either from the
claimant or Barclaycard, as to what the position was back in 1996. We do not have that
evidence and I have to deal with the evidence that is before me.
34. The second real reason why I find in favour of the defendant on this issue is that in general
terms I accept his evidence as I have set out, and having heard him give evidence today I
found him to be a credible witness.
35. Mr Turner on behalf of the defendant made various other submissions associated with the
standard terms and conditions on the blank documention. I did not find those submissions
of such force as his others and they did not play a major part in my conclusion.
36. I am satisfied on the balance of probabilities that the requisite prescribed terms and
conditions were not contained in, on or together with the document that was signed by the
defendant, and therefore I conclude that this is a credit agreement that cannot be enforced.
37. Before I leave this matter, just for the avoidance of doubt and clarity, given that Miss
Margiotta has indicated, in a slightly equivocal submission, that she wishes to reserve
herself on the burden of proof, I hereby indicate that it would have made no difference to
my ultimate conclusion upon whom the burden of proof lay because the result would have
been the same in either event.
End of judgment

The Judgment speaks for itself, i need not say anything more about the case .