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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Jack & Anor v Craig & Ors [2013] EWHC 4047 (Ch) (17 December 2013) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2013/4047.html Cite as: [2013] WLR(D) 498, [2014] Bus LR 424, [2013] EWHC 4047 (Ch), [2013] CTLC 231 |
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CHANCERY DIVISION
COMPANIES COURT
Strand, London, WC2A 2LL |
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B e f o r e :
SIR TERENCE ETHERTON
____________________
IN THE MATTER OF LONDON SCOTTISH FINANCE LIMITED (IN ADMINISTRATION) AND IN THE MATTER OF THE INSOLVENCY ACT 1986 THOMAS JACK SIMON ALLPORT (In their capacity of administrators of London Scottish Finance Limited) -and- (1) KEITH CRAIG (2) JACQUELINE GALLAGHER (3) STEPHEN DUNNE (4) ANN DUNNE |
Applicants Respondents |
____________________
Bradley Say (instructed by Stephensons) for the Respondents
Hearing dates: 3rd December 2013
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Crown Copyright ©
The Chancellor of the High Court, Sir Terence Etherton :
Background
The legal setting
The application
The issues
Section 140A: unfair relationship
"If your arrears continue to increase we will consider taking legal action against you, which could lead to you losing your home."
"The requirement of good faith in this context is one of fair and open dealing. Openness requires that the term should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the consumer. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any other factor listed in or analogous to those listed in Schedule 2 of the Regulations. Good faith in this context is not an artificial or technical concept; nor, since Lord Mansfield was its champion, is it a concept wholly unfamiliar to British lawyers. It looks to good standards of commercial morality and practice".
"2.2 In general terms creditors should:
- not use misleading or oppressive behaviour when advertising, selling, or seeking to enforce a credit agreement…
2.3 In addition to the above there should be:
- transparency in dealings between creditors and borrowers, with information and documentation directed at – or provided to –borrowers being compliant with relevant legislative requirements and not being in any way misleading."
Restitution
The rule in ex parte James
"…there are a number of cases, starting with In re Condon Ex p James (1874) LR 9 Ch App 609, in which a principle has been developed and applied to the effect that 'where it would be unfair' for a trustee in bankruptcy 'to take full advantage of his legal rights as such, the court will order him not to do so', to quote Walton J in In re Clark (a bankrupt) [1975] 1 WLR 559, 563. The same point was made by Slade LJ in In re TH Knitwear (Wholesale) Ltd [1988] Ch 275, 287, quoting Slater J in In re Wigzall, Ex p Hart [1921] 2 KB 835, at 845: 'where a bankrupt's estate is being administered … under the supervision of a court, that court has a discretionary jurisdiction to disregard legal right', which 'should be exercised wherever the enforcement of legal right would … be contrary to natural justice'. The principle obviously applies to administrators and liquidators – see In re Lune Metal Products Ltd [2007] 2 Bus LR 589, para 34."
Section 106
"13. As to these, the claimant submits that section 106 of the Consumer Credit Act 1974 is unequivocal. It provides that in circumstance such as obtained here 'the security… shall be treated as never having effect'; property lodged as security shall be returned; and 'any amount received by the creditor… on realisation of the security…' is to be repaid. Realisation in Mrs Wilson's submission includes receipt of payment from the debtor as well as sale by the creditor. The word is not defined in the Act but it seems to me that the submission must be correct. If it were not, a diligent debtor would be worse protected than a dilatory one. Professor Goode's annotation of the section takes a similar view."
"i) The use of the present tense in s.142(1): the power to make a declaration that the creditor or owner is not entitled to do that thing."
ii) The following words in the subsection: '… and thereafter no application for an enforcement order in respect of it shall be entertained' is a consequence of any declaration and therefore is an integral part of the declaration because it is the very purpose of it. This consequence cannot follow where an agreement is closed.
iii) Some support for the construction contended for by the defendant is provided by the words in s.113(3)(d) where the cross-reference to a s.142(1) declaration is referred to as 'refusal of enforcement order.'
iv) It may well be that the remedy provided for in s.106(d) is then of restricted scope if a declaration cannot be made in respect of a closed agreement but:
a) That does not permit the words of s.142(1) - however purposively construed - to allow the construction for which the defendant contends.
b) Section 142(1) is entirely coherent as a provision without stretching the language beyond breaking point. It permits a court to make a declaration where a creditor applies for an enforcement order and it is dismissed. It also permits an interested party, including a debtor, to apply for a declaration so as to deal with a situation where a creditor or owner does not apply for an enforcement order and, absent s.142(1)(b), the regulated agreement and any security would remain in being though unenforceable.
c) While statutes may clearly empower the courts to make a declaration which is not one of subsisting legal rights, it seems to me that clear terminology would be expected in those circumstances, especially when seen against the backdrop of the general reluctance of the courts to do so (as to which see Civil Procedure 2009 Vol.2 para 9A-77)."
"Once the debt or hirer has fulfilled his obligations (and hence the creditor or owner no longer needs an enforcement order) it seems clear that an order under s.142(1) can no longer be made."
Notification to other debtors
"106 Ineffective securities.E+W+S+N.I.
Where, under any provision of this Act, this section is applied to any security provided in relation to a regulated agreement, then, subject to section 177 (saving for registered charges)—
(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.
"113 Act not to be evaded by use of security.
(1) Where a security is provided in relation to an actual or prospective regulated agreement, the security shall not be enforced so as to benefit the creditor or owner, directly or indirectly, to an extent greater (whether as respects the amount of any payment or the time or manner of its being made) than would be the case if the security were not provided and any obligations of the debtor or hirer, or his relative, under or in relation to the agreement were carried out to the extent (if any) to which they would be enforced under this Act.
(2)In accordance with subsection (1), where a regulated agreement is enforceable on an order of the court or the OFT only, any security provided in relation to the agreement is enforceable (so far as provided in relation to the agreement) where such an order has been made in relation to the agreement, but not otherwise.
(3) Where—
(a) …
(b) …
(c) in relation to any agreement an application for an order under section … 65(1) … is dismissed (except on technical grounds only), or
(d) a declaration is made by the court under section 142(1) (refusal of enforcement order) as respects any regulated agreement,
section 106 shall apply to any security provided in relation to the agreement."
" 120 Consequence of failure to redeem.
(1)If at the end of the redemption period the pawn has not been redeemed—
(a) notwithstanding anything in section 113, the property in the pawn passes to the pawnee where
(i)the redemption period is six months,
(ii)the pawn is security for fixed-sum credit not exceeding £75 or running-account credit on which the credit limit does not exceed £75, and
(iii)the pawn was not immediately before the making of the regulated consumer credit agreement a pawn under another regulated consumer credit agreement in respect of which the debtor has discharged his indebtedness in part under section 94(3); or
(b)in any other case the pawn becomes realisable by the pawnee."
"121 Realisation of pawn.
(1)When a pawn has become realisable by him, the pawnee may sell it, after giving to the pawnor (except in such cases as may be prescribed) not less than the prescribed period of notice of the intention to sell, indicating in the notice the asking price and such other particulars as may be prescribed."
"127 Enforcement orders in cases of infringement.
(1) In the case of an application for an enforcement order under—
…
(a) section 65(1) (improperly executed agreements), ….
the court shall dismiss the application if, but. . . only if, it considers it just to do so having regard to—
(i) prejudice caused to any person by the contravention in question, and the degree …"
"140AUnfair relationships between creditors and debtors
(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—
(a) any of the terms of the agreement or of any related agreement;
(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
(c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).
(2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).
(3) …
(4) A determination may be made under this section in relation to a relationship notwithstanding that the relationship may have ended. "
"140B Powers of court in relation to unfair relationships
(1) An order under this section in connection with a credit agreement may do one or more of the following—
(a) require the creditor, or any associate or former associate of his, to repay (in whole or in part) any sum paid by the debtor or by a surety by virtue of the agreement or any related agreement (whether paid to the creditor, the associate or the former associate or to any other person);
(b) require the creditor, or any associate or former associate of his, to do or not to do (or to cease doing) anything specified in the order in connection with the agreement or any related agreement;
(c) …;
(d) direct the return to a surety of any property provided by him for the purposes of a security;
…"
"142 Power to declare rights of parties.
(1) Where under any provision of this Act a thing can be done by a creditor or owner on an enforcement order only, and either—
(a) the court dismisses (except on technical grounds only) an application for an enforcement order, or
(b) where no such application has been made or such an application has been dismissed on technical grounds only, an interested party applies to the court for a declaration under this subsection,
the court may if it thinks just make a declaration that the creditor or owner is not entitled to do that thing, and thereafter no application for an enforcement order in respect of it shall be entertained.
…"