COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM KINGSTON UPON THAMES COUNTY COURT
(His Honour Judge Hull QC)
Strand, London, WC2A 2LL
Wednesday 2nd May 2001
B e f o r e :
LORD JUSTICE CHADWICK
LORD JUSTICE RIX
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Mr Philip Havers QC and Mr William Hibbert (instructed by Messrs Park Nelson) for the Respondent
Mr Jonathan Crow (instructed by the Treasury Solicitor) for the Secretary of State as Intervenor
Miss Monica Carss-Fisk QC (instructed by the Treasury Solicitor) as Amicus Curiae
Crown Copyright ©
The application of the 1974 Act to the facts in this case
"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)."
It follows that in a case where there is no document signed by the debtor – or no document signed by the debtor which contains all the prescribed terms of the agreement – the court has no power to make an enforcement order. In such a case, the effect of sections 65(1) and 127(3) of the Act is that the agreement is not enforceable against the debtor.
"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 . . . , 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 . . . under . . . the agreement were carried out to the extent (if any) to which they would be enforced under this Act."
In a case where the agreement itself is not enforceable against the debtor – by reason of the provisions in sections 65(1) and 127(3) – the creditor could obtain no benefit if "the security were not provided". So, in such a case, notwithstanding that "security is provided", the security cannot be enforced so as to benefit the creditor. The point is reinforced by section 113(2):
"In accordance with subsection (1), where a regulated agreement is enforceable on an order of the court . . . 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."
In a case where no enforcement order can be made in relation to the regulated agreement, it must follow that security provided in relation to the agreement is not enforceable either.
The Convention rights
"In the determination of his civil rights and obligations . . . , everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. . . ."
Article 1 of the First Protocol to the Convention, agreed at Paris on 20 March 1952, provides that:
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law . .
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest . . ."
"It appears to me that it may be arguable that s.127(3) infringes Article 6(1) and/or Article 1 of the First Protocol set out in Schedule 1 to the Human Rights Act 1998. In the case of Article 6(1) it is arguable that the absolute bar to enforcement in the case of an agreement which does not contain the prescribed terms is a disproportionate restriction on the right of the lender, which exists in all other cases, to have the enforceability of his loan determined by the court. Cf Osman v United Kingdom (1998) 5 BHRC 293. The position is similar in the case of Article 1 of the First Protocol. The money advanced by FCT to Mrs Wilson was in its possession. It lent that money to Mrs Wilson on terms, as it thought, that it should be repaid in six months time. It has been deprived of that possession as provided for by law in the form of s.127(3). But does that law strike a fair balance between the demands of the general community and the fundamental right of the individual? Cf Stran Greek Refineries and Stratis Andreadis v Greece (1994) 19 BHRC 293 para 69."
The Human Rights Act 1998
The issues for decision on the further hearing of the appeal
Whether the relevant provisions of the 1998 Act have any application in this case.
"A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may -
(a) bring proceedings against the authority under this Act in the appropriate court or tribunal, or
(b) rely on the Convention right or rights concerned in any legal proceedings,
but only if he is (or would be) a victim of the unlawful act."
For the purposes of section 7(1)(b) "legal proceedings" includes (a) proceedings brought by or at the instigation of a public authority, and (b) an appeal against the decision of a court or tribunal – see section 7(6) of the Act. That is the context in which section 22(4) of the Act must be read. The section is in these terms:
"Paragraph (b) of subsection (1) of section 7 applies to proceedings brought by or at the instigation of a public authority whenever the act in question took place; but otherwise that subsection does not apply to an act taking place before the coming into force of that section."
It is said that the first limb of that section – which identifies limited circumstances in which section 7(1)(b) applies to an act (alleged to be unlawful under section 6(1)) which has taken place before 2 October 2000 (when section 7, also, came into force pursuant to section 22(3) of the Act) – is the exception which proves the general rule. The general rule, it is said, is that a court is not concerned with alleged infringing acts which took place before 2 October 2000.
Whether the provisions in section 127(3) of the 1974 Act would (but for the application of section 3(1) of the 1998 Act) be incompatible with a Convention right
"However this right [the right of access to a court under article 6(1) of the Convention] is not absolute, but may be subject to limitations; these are permitted by implication since the right of access by its very nature calls for regulation by the State. In this respect, the Contracting States enjoy a certain margin of appreciation, although the final decision as to the observance of the Convention's requirements rests with the Court. It must be satisfied that the limitations applied do not restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired. Furthermore, a limitation will not be compatible with Article 6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved." [emphasis added]
As Lord Steyn pointed out in Reg v Director of Public Prosecutions, Ex parte Kebilene and others  2 AC 326, at page 380E-H, the doctrine of "the margin of appreciation", while a familiar part of the jurisprudence of the Strasbourg Court, has no place, as such, in a consideration by a national court of a Convention issue arising within its own domestic jurisdiction. But he went on to say this, at pages 380H-381D:
" . . . in the hands of the national courts also the Convention should be seen as an expression of fundamental principles rather than as a set of mere rules. The questions which the courts will have to decide in the application of those principles will involve questions of balance between competing interests and issues of proportionality.
In this area difficult choices may have to be made by the executive or the legislature between the rights of the individual and the needs of society. In some circumstances it will be appropriate for the courts to recognise that there is an area of judgment within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose decision is said to be incompatible with the Convention. This point is well made at p.74 para. 3.21 of Human Rights Law and Practice (1999), of which Lord Lester of Herne Hill and Mr Pannick are the general editors, where the area in which these choices may arise is conveniently and appropriately described as the "discretionary area of judgment". It will be easier for such an area of judgment to be recognised where the Convention itself requires a balance to be struck, much less so where the right is stated in terms which are unqualified. It will be easier for it to be recognised where the issues involve questions of social or economic policy, much less so where the rights are of high constitutional importance or are of a kind where the courts are especially well placed to assess the need for protection."
"The striking of a fair balance depends on many factors and the behaviour of the owner of the property, including the degree of fault or care which he has displayed, is one element of the entirety of the circumstances which should be taken into account."
As we have already observed, it is a feature of section 127(3) of the 1974 Act that, where it has the effect of excluding any judicial consideration of the case, it does so without regard to prejudice or culpability. It excludes all consideration of the circumstances of the particular case in favour of a mechanistic approach: does the document contain all the prescribed terms?
". . . the Government do not think that Clause 118 clearly sets out their policy with regard to those matters which the court may or may not overlook. Generally speaking, the Government want the court to overlook everything except a complete omission of the signature, absolute failure to supply a second copy of an agreement in a cancellable transaction, and the complete absence of a notice of cancellation rights in any copy of the agreement. The redraft of sub-sections (1) and (2) makes that clear . . ."
Later, following a change of government, the purpose of the clause (which had become clause 129 of the Bill) was explained by the Minister of State (Lord Shepherd) in a debate in the House of Lords on 6 May 1974:
"Clause 129 permits the court, in certain circumstances, to allow the enforcement of an agreement against a debtor or hirer, even though the agreement was not properly executed. But the debtor or hirer may have been prejudiced in some way by reason of this fact. For example, the agreement may not have set out the terms properly, so that a debtor may have entered into it without fully realising how much he was going to pay. He may have thought that the total amount he was to pay would be £500, whereas in fact it would be £600. It may be that an error in the agreement was due to some unintentional slip by a shop assistant, so that it would be unfair on the creditor to deprive him of all his rights under the agreement.
On the other hand, it might be unfair to the debtor in such a case to make him pay the whole sum. In such a case we feel that the court should be able to act justly between the parties, and order the debtor to pay the creditor a substantial part of the £600, but not the whole of it. If the debtor had been misled into thinking that £500 was all he would have to pay, we think the court should be able to order him to pay £500 only."
It is impossible to find in those passages any indication of the thinking which led the government to propose – or which led Parliament to enact – provisions which draw such a sharp contrast between the power of the court to enforce an agreement contained in a document which omits a term which is not a prescribed term and the position where the document omits a term which is a prescribed term.
Whether it is possible to read and give effect to the relevant provisions of the 1974 Act in a way which is compatible with that Convention right
Whether, as a matter of discretion, a declaration of incompatibility should be made
"The real difficulty, as it seems to me, is that to treat Mrs Dimond as having been unjustly enriched would be inconsistent with the purpose of section 65(1). Parliament intended that if a consumer credit agreement was improperly executed, then subject to the enforcement powers of the court, the debtor should not have to pay. This meant that Parliament contemplated that he might be enriched and I do not see how it is open to the court to say that this consequence is unjust and should be reversed by a remedy at common law: cf Orakpo v Manson Investments Ltd  3 All ER 1,  AC 95."
The submission, as we understand it, is that, notwithstanding that Parliament may have intended that the debtor should not have to pay in certain circumstances, a finding that that intention is incompatible with Convention rights would enable the creditor to say that that consequence is unjust.