Supreme Court Judgment on 7th July 2010 Re: Consumer Credit Act

[Lord_Alcohol]

Would you guys be kind enough to look at the attached agreement to see if all seems in order. Looks like they have stated the VAT amount incorrectly.

 

Looks like VAT should be £3,459.12 and they've undercharged by £35.52

 

Ie,

 

£19,766.40 / 100 x 17.5 = £3,459.12

 

Hope that helps.

 

LA

 

[edit] - quick spell on the calculator shows they have charged VAT at 17.3203% and not 17.5%.

Edited July 14, 2010 by Lord_Alcohol

[Mistermind]

I am personally amazed that the Walker team couldn't see this ruling coming a mile off, and in the process incurred well over £100k in costs

 

The Walkers borrowed £17K. How could they possibly pay £100K to fight all the way to the Supreme Court? Even on a no win no fee basis the lawyers acting for the Walkers were doomed to lose out. Somebody bankrolled this action as a test case?

[Lord_Alcohol]

You are not the only one confused.

 

DJ Gilham in county court ruled the debt was enforceable and allowed a suspended charge on the house(?).

 

Walker appealed, and Circuit Judge Halbert on 27 April 2009 upon appeal ruled it was unenforceable, overturning the charge on the house.

 

The lender appealed, and on 12 NOV 2009 the Court of Appeal allowed the lender appeal, and gave permission for the borrower's appeal to the Supreme Court.

 

Walker then appealed to the Supreme Court to rule again on the lender's appeal on 12 NOV 2009. In para 30 the Supreme Court dismissed the (lender's) appeal. I understand it as the selfsame appeal as was ruled on by the court of Appeal, i.e. the second ruling by a higher and binding court. The entire document says the law lords agreed the true amount of "credit" was misstated, as per legislation before 2007. If that is the correct reading then as their lordships said, the agreement is irredeemably unenforceable in court. Whether the lender will try to collect outside of court is doubtful. My impression is that the OFT clearly said they disapproved of continuing attempted collection where the courts have irredeemably ruled.

 

OMG

 

So I wasn't having a mental episode - it really is quite hard to understand?

 

Many thanks Mistermind (you too m2ae!) - exactly what I was looking for.

 

LA

[niknakszaks]

So, reading from this.

Would incorrect info in the boxes be considered mistakenly placed if the figures are correct?

 

i.e

002web.pdf

[Mistermind]

OMG

 

So I wasn't having a mental episode - it really is quite hard to understand?

 

Many thanks Mistermind (you too m2ae!) - exactly what I was looking for.

 

LA

I read the judgment a third time during office hours and at last understood it. The crux of the judgment is below.

 

23. As the court sees it, the borrowers’ case involves construing section 9(4) as

if it read:

“For the purposes of this Act, an item entering into the total charge for credit shall not be treated as credit even though time is allowed for payment

(unless interest is charged, in which case it shall be treated as credit)”.

There is in our judgment no warrant for the addition of the words in italics

(poster's note: the italics being the borrower's supposition).

 

We agree with the conclusions of Mummery LJ at paras 34 and 35: in particular that the borrowers’ submissions treat interest as a necessary feature or indicator of credit, which it is not, and that it was not the function of section 9 to prohibit anything but rather to supply a special statutory meaning to the core concept of credit in the Act and to distinguish it from the charge for, or cost of, credit.

 

 

24. For the reasons we have given, which are based both on the language of the statute and the authorities cited above, we hold that, although it too was advanced to the borrowers and repayable with interest, the fee of £875 was part of the total cost of, or charge for, credit and therefore cannot be treated as part of the credit.

Walker went to the High Court because the county court judge did not rule on the fact that if the figure in the "credit" box was wrong then the agreement, said the Law Lords, would have been rendered irredeemably unenforceable.

 

Subsequent appeals then centred on whether the broker fee should have been classified as "credit" or as a discrete "financing charge". The borrower said the broker fee attracted debit interest and was repaid over a period same as the borrowing. the Law Lords said it was right for the broker fee to be classified as a financing charge because the broker fee was NOT "credit" as defined by legislation.

 

On this basis the ruling of the Law Lords went for the lender and against the borrower who is now allegedly £100K in the hole for this failed legal action. Wilson was the analogous and opposite precedent, where a financing charge was incorrectly added into "credit" thus rendering the agreement legally unenforceable. The Wilson and Walker cases could not both be upheld for the borrower, as they were exact opposites.

 

The obiter dicta deemed of interest is that the Supreme Court clearly affirmed the criticality of Prescribed Terms as opposed to Required Terms, and the accuracy of terminology. But would "Credit Limit" in contrast to "Approved Limit" supported by explanatory notes on the same page be ruled on in the same way as when a broker fee was wrongly stated in the "credit" box -- a categorical black-or-white error on which the Wilson case supplied a clear precedent?

Edited July 14, 2010 by Mistermind
text formatting

[rebel11]

Lets hope the nomarks at Barclaycard understand it, some how I doubt it.