RANKINE v MBNA EUROPE BANK LTD [2007]

[Never-In-Doubt]

2007 WL 4190644
Case No: B2/2007/1019
Neutral Citation Number: [2007] EWCA Civ 1273

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BIRMINGHAM COUNTY COURT
(MR RECORDER CORNER QC)

Royal Courts of Justice
Strand, London, WC2A 2LL

Friday,26th October 2007

Before:
LORD JUSTICE GAGE
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Between:

RANKINE
Appellant

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MBNA EUROPE BANK LIMITED
Respondent
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THE APPELLANT APPEARED IN PERSON
THE RESPONDENT DID NOT APPEAR AND WAS NOT REPRESENTED
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Judgment
As Approved by the Court

Lord Justice Gage:

1. This is an application for permission to appeal the decision of Mr Recorder Corner QC made at the Birmingham County Court on 14 February 2007. By his order he dismissed the claimant's claim against the defendant.

2. The claim by the claimant was in respect of two credit card agreements. It was contended by the claimant, in the third amended Particulars of Claim, that the agreements were unenforceable by reason of breaches of the Consumer Credit Act 1974. The judge found that the claimant had entered into two agreements with the defendant, and that they were not cancellable agreements under the Consumer Credit Act 1974. In the circumstances, he held that the statutory obligations, in relation to the inclusion of a right to cancel notices, did not apply. It is this finding which is essentially at the heart of this application for permission to appeal.

3. So far as material, the factual background can be shortly stated. On 2 April 2002 and 6 June 2002 the claimant applied for credit cards with the defendants. In June 2005 the claimant defaulted on the repayments of the monies she owed under those credit card agreements, leaving £9,457 outstanding. On about 8 February 2006 the claimant issued a claim for a declaration that the credit card agreements were not enforceable by reason of their not having been properly executed under the statutory provisions of the Consumer Credit Act 1974.

4. By her third amended Particulars of Claim, dated 6 February 2007, the claimant made a number of allegations in relation to the form of the agreements and their lawfulness. The one upon on which this application really centres was an allegation that the forms in breach of regulation 5(1) of the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983, as amended, the regulations did not contain the requisite right to cancel notice such that they were unenforceable. Alternatively, it was contended that, in the event section 127(3) and (4) are not applicable, the claimant suffered prejudice as a result of the breaches of the Act.

5. The judge, as I have said, found against the claimant. He found that the agreements were not cancellable agreements within the statutory definition in the Consumer Credit Act. He went on to find that, even if they had been, he would have exercised his discretion to enforce the agreements under section 127 of the Consumer Credit Act.

6. There are a number of grounds of appeal. I have read the skeleton argument and the grounds of appeal put in by the claimant herself, who is represented today by her husband, Mr Rankine. The central ground, however, upon which Mr Rankine has made his submissions, relates to regulation 54 of the regulations to which I have already referred. He further submits that the defendants had voluntarily submitted to the statutory provisions of the Consumer Credit Act in relation to cancellable agreements.

7. It is necessary for me to set out a little background. There is no dispute that a registerable agreement (which this is) may be a cancellable agreement if the provisions of section 67 of the Consumer Credit Act apply. For the agreement to be a cancellable agreement there must have been "antecedent negotiations" before the agreement was entered into, and those negotiations must have included oral representations. If the agreement becomes a cancellable agreement, it cannot be enforced if section 64(1) -- the duty to give notice of cancellation rights -- is not complied with. The reason for this is a combination of the provisions of section 65(1), section 180(2), and section 127(4)(b). In short, the reason is that, by section 64(1), a creditor must, in the case of a cancellable agreement, provide a notice in the prescribed form in the agreement. If it is not provided in the prescribed form it becomes a cancellable agreement not properly executed. Under section 127, the creditor has a right to apply to seek enforcement of a not properly executed agreement if it is just to do so. However, the court cannot make an enforcement order of a cancellable agreement if section 64(1) has not been complied with. That is the effect of section 127(4)(b) of the Act.

8. The recorder found that the agreement was not an improperly executed cancellable agreement. He found as a fact that there had been no antecedent negotiations or representations made before the agreement was entered into. That finding is contained in paragraphs 35 to 37 of the judgment. I do not recite those paragraphs, since, as I understand it, the recorder's findings in that respect, are not and cannot be challenged. However, at the hearing and in the Notice of Appeal and skeleton argument, it is said that regulation 5(4) applies. Regulation 5(4) reads as follows:

"In the case of an 'agreement' which is not a cancellable agreement within the meaning of the Act and these Regulations but which may be cancelled by the debtor or hirer in accordance with terms of the agreement conferring upon him similar rights as if the agreement were such a cancellable agreement, the agreement may be treated for the purposes of this Regulation as if it were a cancellable agreement within the meaning of the Act and of these Regulations, and Regulation 2 shall then apply as if the agreement was such a cancellable agreement."

9. Before the recorder, the claimant alleged that the agreement conferred "similar rights" and so the agreement, by virtue of that regulation, became a cancellable agreement under the Act. However, the judge found that it was not. His findings are set in paragraphs 38 to 40 of his judgment. He recites in summary the provisions of regulation 5(4) and at paragraph 39 states:

"However, I accept the submissions for the Defendant that the agreement in this case did not confer similar rights because crucially, although a right to cancel was offered, no time frames for cancellation were set out, which one would expect to see if similar rights were being conferred."

10. Accordingly, having found that it was not a cancellable agreement, he found that the statutory provisions -- which prohibited the court from enforcing, by order, the agreement -- did not apply. That is the first ground for challenging the finding of the recorder. It is submitted on the facts found by him that he was wrong to hold that regulation 5(4) did not apply.

11. In the written statement put in by Mr Dilworth (of counsel) and the skeleton argument put in by the claimant in person, and further, by the submissions of her husband Mr Rankine, it is submitted that the judge, on the findings of fact, incorrectly ruled that regulation 5(4) did not apply. It is submitted in the written statement that, crucially, the judge ignored clause 18.1 of the terms and conditions of the agreement. That reads as follows:

"Even if you have no right to cancel this agreement under the Consumer Credit Act 1974, you will have the same right to cancel this Agreement, and the same responsibilities if you cancel this Agreement, as if you have a right to cancel this Agreement under the Act."

12. Pausing there, that, it seems to me, must be the basis for the submission that the defendants had voluntarily contracted into the provisions of the Consumer Credit Act. However that may be -- and I will deal with that submission a little later in this judgment -- it is submitted that this term assists in importing into the agreement the statutory five-day cooling off period. So, it is submitted, the agreement grants similar rights and so qualifies under regulation 5(4).

13. For the purposes of this application, I am prepared to accept that it is at least arguable that the recorder was wrong to find that regulation 5(4) did not apply. One then has to go on and ask the question: what if it does apply? It is submitted by Mr Rankine that the full effect of the statutory provisions relating to cancellable agreements then comes into force. The result is that the agreements are not enforceable by virtue of a breach of section 64(1) and the combination of that and sections 127(4)(b).

14. In his written statement, Mr Dilworth makes attractive submissions as to why it is that the regulations must be seen in the context of the statutory provisions, so the statutory provisions have full effect. He submits (and this is echoed in the submissions made by Mr Rankine this morning) that, unless that were so, the regulations would be toothless. There must be some penalty, it is submitted, for a failure to comply with the regulations, provided, of course, that regulation 5(4) applies.

15. I shall deal first with the submission that the defendants voluntarily contracted into the statutory provisions. I am bound to say that I can see no arguable ground that that submission is correct. The passage in the agreement, to which I have referred, does not seem to me to provide a sufficient foundation for it. It seems to me, also, looking at the statutory provisions, that there is clearly a difference between a statutory, cancellable agreement, which conforms to the definition in Section 67 of the Consumer Credit Act and a contractual agreement, which provides some rights for cancellation. The two are not the same.

16. So far as the submission that regulation 5(4) imports into the agreement the full effect of the statutory provisions under the Act, again I have come to the conclusion that that submission also must fail.

17. Sir Henry Brooke, when refusing permission on paper, said this of regulation 5(4):

"It is only concerned with what may be treated as a cancellable agreement for the purposes of the Regulations, not for the purposes of the Act."

18. With respect, I agree. What the regulation does not say is that the agreement will be deemed to be a cancellable agreement under the Act. In the circumstances, as I have said, I agree with the view expressed by Sir Henry Brooke when refusing leave.

19. This does not mean that the regulations have no effect. Regulation 2 of the regulations provides that an agreement must be legible. It provides for a form to be used. And so, if those provisions are not complied with, then it becomes a not properly executed agreement. It follows that if it is a not properly executed agreement, the court has power under section 65(1) to enforce it by an order of the court and only by an order of the court. That brings one back to section 127, to which I have already referred.

20. Mr Rankine accepts that it is only subsection 4 which provides an absolute bar to the court making an enforcement order. Absent that provision, the court has power to make an enforcement order, providing it finds that it is just to do so. It has to have regard, in those circumstances, to the prejudice caused to any person by the contravention of the statutory provisions and other matters. It is, of course, in the court's discretion.

21. It seems to me that in this case what has happened is that the agreements which the claimant entered into were registerable agreements (see section 61 of the Consumer Credit Act 1974) and not cancellable agreements (see Section 67). In the circumstances, if there are any breaches of the forms that are required by section 61, then the court can enforce the agreements by an order under section 127.

22. It is clear from his judgment that the judge did not consider the question of enforcement on that basis. He did, however, go on to consider it on the basis that he might be wrong in concluding that it was a cancellable agreement. His consideration of the question of whether an enforcement order could or could not be made is set out in paragraphs 44 to 49. There is no specific challenge to those findings. In effect, what the recorder said at paragraph 46 was this:

"At paragraph 35 the Claimant says that she might have obtained a credit card elsewhere at a lower rate of interest and a better introductory offer. However, she gave no evidence that she failed to understand exactly the nature of MBNA's offer, let alone any evidence that she might actually have got a better deal elsewhere. I do not accept that this would prove prejudice, let alone been a ground for a claim for damages."

23. Accordingly, having considered that, he found that there would be no prejudice to the defendant and, were it necessary to do so, he would make an enforcement order.

24. So far as I can see he did not make an enforcement order; what he did was to dismiss the claim. In my view, not only was he entitled to do so, on his findings, he was correct to do so, and I can find no arguable grounds of appeal. There is no real prospect of success and, therefore, I reject this application for permission.

Order: Application refused