Using ‘reconstituted’ agreements for s61
1. HHJ Waksman clarified the different requirements for documentary evidence pursuant to s78 and s61 with reference to so called ‘reconstituted’ copies of agreements in Carey v HSBC (supra) where he said:
. This judgment deals with two matters concerning requests for copies of credit card agreements pursuant to section 78 of the Consumer Credit Act 1974 (“the Act”) and the consequences of non-compliance with that provision.
. The purpose of this judgment is to give general guidance, in the context of the cases before me, in the hope that this will narrow or eliminate the issues arising in the hundreds of other similar claims issued in County Courts around the country, many of which have been stayed pending the outcome here.
. The issue here is this:
(1) When providing a copy of an executed agreement in response to a request under s78(1) of the Consumer Credit Act 1974:
(a) Must a creditor
(i) provide a photocopy (or other form of complete copy) of the original agreement that was signed by the debtor or at least provide a copy which is derived directly from the original agreement or complete copy thereof, or
(ii) can a creditor provide a document which is a reconstitution of the original agreement which may be from sources other than the actual signed agreement itself?
(b) Must a creditor provide a document which would comply (if signed) with the requirements of the Consumer Credit (Agreements) Regulations 1983 as to form, as at the date the agreement was made in order to comply with s78?
2. Judge Waksman then defines the different ‘purposes’ in relation to copy documents supplied under s78, that is: ‘the Proof Purpose’ as distinct from ‘the Current Information Purpose’.
. It is common ground that the purpose of s78 is (at least) to provide the debtor with information as to the terms of the agreement with the creditor, as well as a present statement of his account and future obligations insofar as they are known. Beyond that common ground, however, the parties have adopted very different positions. The Claimants (debtors) say that the information is both as to the present and the original position under the agreement, and the reason for having the information about the original agreement is so that the debtor may be satisfied that he did indeed enter the agreement by signing a document which was a properly executed agreement (“the Proof Purpose”). On the other hand, the Defendants (creditors) say that it is a question only of providing current information, that is, information about the current terms of the agreement along with current financial details (“the Current Information Purpose”).
3. He then confirms he doesn’t consider the s78 document as Proof Purpose for s61.
 (3) Once it is accepted that provision of a photocopy to the debtor is not required and that the signature may be omitted, it is not clear why the purpose is not simply information as to what the agreement contained as opposed to proof of its making;
(8) Moreover, the Proof Purpose contention requires that the creditor retain not only the front of the application form – where the signature would be – but also the reverse, assuming that not all the terms were on the front and the reverse was not simply blank. It would not be enough for the creditor to produce a copy of what it said were the prevailing terms at the time for that card. Mr Uff said that this additional burden might be avoided if the front of the form had some sort of code on it, perhaps at the bottom, to indicate the precise set of terms which would apply and which could in turn be ascertained by reference to that code. But absent that both sides would be needed;
(9) (narrative omitted for clarity) ….. So the bank could not provide the source for the copy as the Proof Purpose required…. (narrative omitted for clarity)…..But if that were right it undermines the Proof Purpose advanced which depends on the creditor at least seeing for itself the executed agreement at the time of the request for the copy.
(11). It is said that if the debtor cannot have a copy in the sense required (for the most part) by Mr Uff and Mrs Thompson then he is at a disadvantage should he wish to challenge whether he made a properly executed agreement at all. I do not agree. First, this point only has real force if the Proof Purpose underlays s78 and I do not think that it does. Second, it assumes that there is no obligation on the debtor to make out at least some sort of positive case as to improper (or non-) execution of the original agreement. If he does and for example asserts positively that although he has been using a credit card agreement for years he never actually signed an agreement, or one that complied with s61, the creditor may well have to try and find the original in order to deal with that allegation. (I deal further with the absence of such positive allegations in relation to s61 when I consider below the Applications.) But that tells one nothing about the scope of s78;
(13) I have already adverted to the overarching purpose of the Act being consumer protection within the ambit of a new and consistent framework which has benefits for lenders, too. But that does not impel a conclusion that the purpose of s78 must be the Proof Purpose.
(14) Mrs Thompson submitted that the approach she advocated with Mr Uff was not merely dependent on the Proof Purpose but also followed from the language of s78. But I do not accept that the language here impels that result and all the factors already mentioned point away from it.
. Accordingly, the copy need not be as contended for by Mr Uff and Mrs Thompson and instead, a creditor can satisfy its duty under s78 by providing a reconstituted version of the executed agreement which may be from sources other than the actual signed agreement itself.
. Mr Uff in particular contended that this was not s78 compliant because the name and the address did not come from the executed agreement. He said that the copy had to be of that document which on its face tied itself to the debtor. Only in that way could the debtor be assured that agreement was indeed to be attributed to him because the name and address on it was reproduced directly on to the copy. But this argument depends on the correctness of the Proof Purpose being the driver behind s78 and the Copies Regulations, which I have rejected. On the other hand, it is not as if the provision by the creditor of the name and address from its records is not of some value to the debtor. It at least indicates that the creditor has a record of the fact of this person at an identified address making an agreement at some point in the past.
. The question is “Must a creditor provide a document which would comply (if signed) with the requirements of the Consumer Credit (Agreements) Regulations 1983 as to form, as at the date the agreement was made?” and the answer to be given is “No”.
. I see no difficulty in saying that the framers of the Act saw it as important in the interests of debtors that they should able to obtain a copy of the agreement they made for whatever purpose they want, it being assumed that they ask for a copy because they have mislaid their own, and then, if in fact the agreement has been varied, they are given the up to date terms as well. This is what Options A and B are designed to do, more or less elegantly. The fact that the purpose of s78 falls short of the supply of proof or the best evidence possible of the executed agreement does not undermine this.
. ………(narrative omitted for clarity)……. I have already held that the purpose of the s78 copy is not to provide proof. ……..(narrative omitted for clarity)…..
4. In my opinion it is clear that Judge Waksman concluded that ‘reconstituted documents’, whilst they may be acceptable in response to s78 requests for ‘Information’ purposes only, they cannot be considered ‘Proof Purpose’ of an executed agreement, i.e. ‘reconstituted’ agreements are not for the purpose of providing proof of compliance with s61.
5. Judge Waksman then describes what documents he thinks do constitute an executed agreement for the purposes of s61:
. This arises solely in connection with s61(1)(a) and the requirement thereunder that the document signed by the debtor “contains” all the Prescribed Terms. The question is as follows:
“Does the document signed by the debtor contain the Prescribed Terms for the purposes of section 61 and/or section 127(3) if:
(a) they are on a sheet which is referred to on the piece of paper that was signed by the debtor; or
(b) where that sheet is attached to the piece of paper signed by the debtor; or
© where that sheet is separate from but was supplied with the piece of paper signed by the debtor?”
. 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.
(a) 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;
(b) A document need not be a single piece of paper;
© 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;
(d) Additionally, a physical connection (or one or more physical connections) between several pieces of paper does not necessarily constitute them as one document;
(e) 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 form.
. As a matter of law, those principles appear to me to be correct, in the context of s61.
Judge Waksman then identifies the documents supplied as The Assumed Facts.
. According to HSBC, p197 is a reconstituted application form. I referred to it above in the context of Issues 1 and 2. The assumed facts here are as follows:
(1) Ms Carey signed a form which contained, among other things, the entries at p197 including the specific reference to being bound by “the terms and conditions attached”; that form did not itself have the Prescribed Terms stated on the front or the reverse;
(2) The form (referred to as “a signature page” in the WS from Alan Burden dated 3 December 2009) would have been produced with Ms Carey’s details already on, for her to sign once her application, already made, had been approved;
(3) At the same time as the form was produced electronically, the relevant terms and conditions (including the Prescribed Terms and information) would have been printed off and physically attached to the form by a staple;
(4) Ms Carey would then have been invited to read the agreement, consisting of the signature page and attached terms and would then have signed and dated the signature page. It would then have been countersigned by the bank;
(5) The relevant terms and conditions would not have been precisely in the form of pages 198-201 simply because that is a s63 copy with the different cancellation clause. But they would have been the full terms with the Prescribed Terms included either in landscape form (as shown at pp198-201) or portrait form.
6. As can be seen from the above narration, the document supplied as the signature page did not have the prescribed terms on the front or reverse, but did say they were ‘attached’.
7. A further document forming the agreement was then produced with Ms Carey’s details already on, for her to sign and this form was in addition to an ‘application, already made’.
10. These observations as to ‘substance and not form’ as contended for by Judge Waksman are that the signature page and its terms and conditions do not have to take the ‘form’ of one piece of paper (the so called ‘four corners rule’), but that in ‘substance’ should be one homogenous document. I would refine that further by observing that a document that is signed as an agreement that refers to terms on the ‘reverse’ or ‘attached’ or display contiguous page numbering or in any way implying the terms were unarguably present at the point of signature would be regarded as one document containing those terms. On the other hand, a signed document that states the terms were ‘supplied separately’ or contains phrases such as ‘I have received…’ and ‘I have read …’ would suggest the terms were in another document separate from and not contained within the signed document at the time of signing.
11. Also Reg. 7 of Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 makes further provision in respect of copies where the agreement has been varied under the heading “Copies of agreements or security instruments where the agreement or security instrument has been varied”“
Where an agreement has been varied in accordance with section 82(1) of the Act, every copy of the executed agreement given to a debtor, hirer or surety under any provision of the Act other than section 85(1) shall include either—
(i). an easily legible copy of the latest notice of variation given in accordance with section 82(1) of the Act relating to each discrete term of the agreement which has been varied; or
(ii). an easily legible statement of the terms of the agreement as varied in accordance with section 82(1) of the Act”.
12. Judge Waksman discusses this as Issue 2:
. “If an agreement has been varied by the creditor under a unilateral power of variation, is a copy of the executed agreement as varied, a sufficient copy for the purposes of section 78(1), or must the creditor provide a copy of the original agreement as well?”
and after lengthy argument, he concludes:
. Accordingly, I conclude that Reg. 7 requires a copy of the executed agreement in its original form as well as a statement of the terms as they are at the time of the request.
13. Clearly creditors have varied most agreements in that credit limits and interest rates have varied and therefore a copy of the executed agreement in its original form is required to comply with the Regulation. The reconstituted documents provided are not copies of the executed agreement in their original form, and it follows the original document cannot be shown to contain the prescribed terms and to have been properly executed.
14. It is respectfully submitted that the court should adopt the same reasoning in determining this issue, irrespective of whether or not it finds that the defendant was supplied at another time with documents other than the credit card application itself.