England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEICESTER COUNTY COURT
HHJ HAMPTON
1NN00841

		Royal Courts of Justice Strand, London, WC2A 2LL
		10th June 2014

Lord Justice Kitchin:

Introduction

1. This is an appeal against the judgment of Her Honour Judge Hampton given on 19 November 2012 whereby she held the respondent claimants, Mr Mark Scotland and Miss Emma Reast, were entitled to compensation from the appellant defendant, British Credit Trust Limited ("BCT"), having found that the relationship between them was unfair within the meaning of s.140A of the Consumer Credit Act 1974 ("the Act").
2. BCT is a finance company. It has no sales team of its own but obtains its business through brokers to whom it pays a commission. In March 2005 it lent the claimants £8,563.08 comprising £7,430.00 to allow them to purchase double-glazed windows and doors, and a further £1,133.08 to allow them to purchase payment protection insurance ("PPI"). The term of the loan was 10 years.
3. In November 2011, over six years later, the claimants began these proceedings alleging that the loan was improperly executed; that BCT was liable for misrepresentations made by the salesmen about the PPI; and that the relationship between the claimants and BCT was unfair. The first allegation was withdrawn early in the proceedings and it was accepted at trial that the second was time barred. Accordingly the only allegation with which the judge had to deal was the third, that is to say whether the relationship was unfair.
4. The judge held that the relationship was indeed unfair by reason of the conduct of the salesmen and she made a consequential order varying the terms of the loan and directing BCT to repay to the claimants the sum of £2,165.52 being the insurance premium and the interest paid in respect of it.
5. The judge refused permission to appeal. On 27 March 2013 Bean J granted permission and directed that the appeal be transferred to this court pursuant to CPR 52.14 on the basis that it raised an important point of principle. He took that course primarily in the light of observations made by Tomlinson LJ in Harrison v Black Horse [2011] EWCA Civ 1128 at [31] that a misrepresentation was likely ordinarily to be irrelevant to the question whether a relationship was unfair. I must return to this decision and its relevance to the present case later in this judgment but for present purposes simply note that Bean J considered that it raised an issue which could only authoritatively be decided by this court and so merited the exercise of his discretion and the taking of what he recognised to be an unusual course. The appeal was accepted by this court on 23 April 2013.

The background

6. The background facts are not in dispute. In January 2005 the claimants were visited in their home by two double glazing salesmen who were acting on behalf of Bowater Windows Limited, a company which carried on business under the trading name Zenith Staybrite.
7. The visit lasted most of the day and during the course of it the claimants were shown DVDs of products which Zenith Staybrite was offering for sale. At the end of the visit the claimants decided to buy a full set of windows and doors. However, as a young couple with limited funds, they needed a loan, which the salesmen offered to arrange through an associated broker. The parties are agreed that, for the purposes of this appeal, Zenith Staybrite and the broker may be treated as one entity and so I shall refer to them together as "Zenith".
8. At this point the salesmen misled the claimants. They told them, wrongly, that in order to secure a loan they would need to purchase PPI. Moreover, the term of the proposed loan was ten years yet the PPI policy offered by the salesmen only provided protection for five years. Further, the claimants were both full time employees at Asda and in the event of any illness which prevented them from working were entitled to sick pay, a fact which the salesmen failed to take any steps to ascertain.
9. The claimants were turned down by the first finance company approached by Zenith. However, their application to BCT was accepted. As was explained to us during the course of the appeal, it was made by Zenith to BCT pursuant to an arrangement that BCT has with various brokers, including Zenith, under which the broker may submit an application to BCT electronically and, if it is accepted, BCT will pay the broker a commission. I would emphasise, however, that BCT was not at any time directly involved in the negotiations for the loan with the claimants, and Zenith was not BCT's common law agent. Further, BCT did not require any borrower to purchase PPI in order to be eligible for one of its loans, and BCT would have lent to the claimants the sum necessary for the purchase of the windows and doors without any PPI being purchased. In short, there was nothing to suggest that BCT acted culpably in its own dealings with the claimants.
10. The loan agreement was concluded on 11 March 2005 and the PPI policy was duly issued by Sterling Life Limited and Sterling Insurance Company Limited (together "the insurers") on 1 July 2005. Neither of the insurers was shown to be connected to BCT. However, BCT did receive a commission in respect of the sale of the PPI policy and it has received interest on the part of the loan which relates to it. But it did not receive the PPI premium itself.
11. These proceedings were issued on 4 November 2011, by which time Zenith, and here I mean both Zenith Staybrite and the broker, had ceased trading.

The judgment

12. The judge held that Zenith had made a misrepresentation to the claimants that it was necessary for them to take out the PPI policy in order to secure the loan. She also found that Zenith had sold them the PPI policy in breach of the ICOB rules. She reached that conclusion on two bases. First, the misrepresentation meant that Zenith had failed to communicate with the claimants in a way that was clear, fair and not misleading, contrary to rule 2.2.3. Second, the discrepancy between the term of the loan (10 years) and the term of the policy (5 years), and the failure by the salesmen to ascertain whether the claimants were entitled to sick pay meant that Zenith had failed to take reasonable steps to ensure that the policy was suitable, contrary to rules 4.3.1, 4.3.2 and 4.3.6. The judge also found that but for the misrepresentation and breaches of the ICOB rules, the claimants would not have taken out the PPI policy. There is no appeal against any of these findings.
13. The judge then proceeded to consider the operation of the Act. In this regard she held that the negotiations conducted by Zenith's salesmen were deemed to have been conducted by Zenith on its own behalf and also as agent of BCT as a result of the interplay between s.11(1)(b), s.12 and s.56(2) of the Act. Further, Zenith's conduct was therefore relevant as "things done (or not done) by, or on behalf of, the creditor" in determining whether the relationship between the claimants and BCT was unfair within the meaning of s.140A. Since the claimants would not have purchased the PPI policy but for the misrepresentation and breaches of ICOB, it followed that those matters created an unfair relationship and the court could therefore exercise the discretionary powers conferred by s.140B.
14. Finally, the judge exercised her discretion under s.140B by, in substance, requiring BCT to repay the loan payments referable to the PPI policy and varying the loan agreement so as to excuse the claimants from repaying the rest of the loan so far as it related to the policy.

The appeal

The course of the appeal

15. This appeal has taken a rather unusual course. It originally came on for hearing on 4 December 2013. On that occasion Mr Tolley, who appeared on behalf of BCT, submitted that the judge fell into error at a number of points in her analysis. First, he made the overarching submission that the deemed agency provisions of s.56(2) have no relevance to s.140A at all. There are, he submitted, provisions for the attribution of vicarious liability in s.140A which are quite different from those in s.56. Indeed, in the course of his submissions and in response to questions from the court, Mr Tolley argued that s.56(2) performed some kind of definitional function within the Act, but no more.
16. Second, and focusing now on the misrepresentation by Zenith, Mr Tolley argued that the judge was wrong to take this into account in any event. In that regard he submitted that the Act provides specific remedies for misrepresentation in s.75 such that there is no need to provide an alternative remedy for the same type of wrong by means of s.140A.
17. Third, and turning to the ICOB rules, Mr Tolley submitted that the judge fell into error in finding that the ICOB rules had any relevance to the claim based upon s.140A. The rules do not apply to a lender in the position of BCT which is neither an insurance product provider nor an insurance intermediary. Further, there are alternative remedies available in respect of a breach of these rules by a supplier or broker and the judge erred in failing to take these into account.
18. Fourth, and if, contrary to the foregoing, this court were to decide that it is permissible to take into account misrepresentations by a supplier and broker such as Zenith, Mr Tolley argued that the judge was nonetheless wrong to regard the existence of such factors as decisive in the claimants' favour. Here he submitted the judge failed to take into account highly material factors which showed that, overall, the relationship was not unfair.
19. Following the hearing but before judgment, we drew to the attention of the parties the decision of this court in Jarrett v Barclays Bank plc [1999] QB 1 to which we had not been referred at the hearing but which we considered had a bearing on Mr Tolley's submissions. For their part, the parties themselves filed further written submissions, dealing not only with the decision in Jarrett but also two other potentially relevant decisions to which, once again, neither party had made reference at the hearing, one being the decision of this court in Forthright Finance Ltd v Ingate (Carlyle Finance Ltd, third party) [1997] 4 All ER 99 and the other that of Gray J in Black Horse Ltd v Langford [2007] EWHC 907, [2007] RTR 38.
20. These further cases prompted Mr Tolley to review the underlying statutory basis for the asserted application of s.56(2) and to argue that careful analysis of s.56 together with ss.11 and 12 of the Act made clear that there was never a debtor-creditor-supplier agreement within the meaning of s.12(b) in respect of the PPI, and that the only relevant negotiations for the purposes of s.56(2) were those conducted by Zenith in relation to the supply of the windows and doors. Accordingly, he continued, there could be no question of attributing any misrepresentation concerning the PPI to BCT.
21. Then, on 16 December 2013, a different constitution of this court gave judgment in the case of Plevin v Paragon Finance [2013] EWCA Civ 1658. This is of direct relevance to the present appeal, dealing as it does with the proper interpretation of s.140A. We also took the view that we might wish to consider whether the agreement for the provision of the PPI was a "related agreement" for the purposes of s.140A, and what the implications of that might be for the disposal of the appeal.
22. In light of these developments we invited the parties to file further comprehensive written submissions dealing with all of these new issues, together with those addressed in their original skeleton arguments. They duly did so and efforts were made to restore the appeal for further hearing as soon as possible. Regrettably that was not possible until 22 May 2014. On that day we heard further submissions on all of the new issues from Mr Tolley QC (as he had now become) on behalf of BCT and Mr Butters on behalf of the claimants.
23. In the result, the following issues now fall to be considered:

i) The scope of s.56(1)(c) of the Act, and the effect of the agency to which s.56(2) gives rise.

ii) The effect (if any) of the decision of this court in the Plevin case.

iii) Whether the agreement for the provision of the PPI was a "related agreement" for the purposes of s.140A and, if so, what implications this has for the appeal.

iv) Whether it was in any event appropriate to take into account the misrepresentation made by Zenith in assessing whether the relationship between the claimants and BCT was unfair.

v) The correct overall approach to be taken to an unfair relationship claim and, specifically, whether any misrepresentation or breach of the ICOB rules should be regarded as determinative.

24. I will address all of these issues in turn but first must set them in context by saying a little about ss.140A-C and the various ways the claimants contend that their provisions come into play in this case.

Sections 140 A to C – the unfair relationship

25. Sections 140A-C of the Act are designed to enable a borrower to challenge a credit agreement in court on the ground that the relationship between the creditor and the borrower is unfair to the borrower. These provisions (introduced by the Consumer Credit Act 2006) replaced the extortionate credit bargain provisions of the earlier regime with a new scheme intended to provide consumers with enhanced protection based on the concept of an "unfair relationship". As s.140A makes clear, the court may determine whether a relationship arising out of a credit agreement (or that agreement taken with a related agreement) is unfair because of one or more of the matters set out in subsection (1) and having regard to all matters it considers relevant. It provides, so far as material:

"140A Unfair 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) For the purposes of this section the court shall (except to the extent that it is not appropriate to do so) treat anything done (or not done) by, or on behalf of, or in relation to, an associate or a former associate of the creditor as if done (or not done) by, or on behalf of, or in relation to, the creditor."

26. Section 140B then confers upon the court wide powers to redress the unfairness. Interestingly, under subsection (9), if the debtor alleges the relationship between the creditor and the debtor is unfair, it is for the creditor to prove the contrary.
27. The claimants now seek to attribute the acts and omissions of Zenith to BCT and so contend that their relationship with BCT is unfair within the meaning of s.140A in the following three separate but related ways, each of which I address later in this judgment. The first is by operation of s.56 of the Act and formed the foundation for their case at trial, a case which the judge accepted as I have described.
28. The second is based upon the phrase "on behalf of" in s.140A(1)(c) and the explanation of its scope given by this court in the Plevin case. In very broad terms this court held that this phrase brought within the permissible scope of the court's consideration any act or omission by a person who would be viewed by the ordinary reasonable person as having played some part in the bringing about of the credit agreement for the creditor.
29. The third is through the concept of the "related agreement" in s.140A(1). In short, the claimants argue that the PPI policy is, in any event, a related agreement and accordingly the court may, in assessing the fairness of the relationship arising out of the credit agreement taken with the PPI, have regard to anything done (or not done) by, or on behalf of, BCT either before or after the making of the credit agreement or the purchase of the PPI.
30. A related agreement is defined in s.140C(4) in these terms:

"140C Interpretation of ss.140A and 140B.

…

(4) References in sections 140A and 140B to an agreement related to a credit agreement (the 'main agreement') are references to:

…

(b) a linked transaction in relation to the main agreement or to a credit agreement within paragraph (a); …"

31. This then takes one back to s.19 for the definition of a linked transaction:

"19 Linked transactions.

(1) A transaction entered into by the debtor or hirer, or a relative of his, with any other person ( "the other party "), except one for the provision of security, is a linked transaction in relation to an actual or prospective regulated agreement (the "principal agreement ") of which it does not form part if—

(a) the transaction is entered into in compliance with a term of the principal agreement; or

(b) the principal agreement is a debtor-creditor-supplier agreement and the transaction is financed, or to be financed, by the principal agreement; or

(c) the other party is a person mentioned in subsection (2), and a person so mentioned initiated the transaction by suggesting it to the debtor or hirer, or his relative, who enters into it—

(i) to induce the creditor or owner to enter into the principal agreement, or

(ii) for another purpose related to the principal agreement, or

(iii) where the principal agreement is a restricted-use credit agreement, for a purpose related to a transaction financed, or to be financed, by the principal agreement.

32. BCT does not accept that the PPI policy is a related agreement but its primary position is that the question whether it is or not is immaterial because there is no reference in s.56 to the concept of a linked transaction, and so the deemed agency provisions this section contains cannot make BCT responsible for any conduct of Zenith in relation to the PPI policy. These too are matters to which I must return.

Section 56

33. The first issue concerns the scope of s.56(1) and the effect of the deemed agency arising under s.56(2). The section reads, so far as material:

"56. Antecedent negotiations.

(1) In this Act "antecedent negotiations" means any negotiations with the debtor or hirer -

(a) conducted by the creditor or owner in relation to the making of any regulated agreement, or

(b) conducted by a credit-broker in relation to goods sold or proposed to be sold by the credit-broker before forming the subject-matter of a debtor-creditor-supplier agreement within section 12(a), or

(c) conducted by the supplier in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement within section 12(b) or (c),

and "negotiator" means the person by whom negotiations are so conducted with the debtor or hirer.

(2) Negotiations with the debtor in a case falling within subsection (1)(b) or (c) shall be deemed to be conducted in the capacity of agent of the creditor as well as in his actual capacity.

…

(4) For the purposes of this Act, antecedent negotiations shall be taken to begin when the negotiator and the debtor or hirer first enter into communication (including communication by advertisement), and to include any representations made by the negotiator to the debtor or hirer and any other dealings between them."

34. Section 56 plays a central role in the Act in defining the terms "antecedent negotiations" and "negotiator" and so provides a foundation for the provisions which follow and which deal with such matters as the right to withdraw from prospective agreements (s.57), the right to cancel regulated agreements (ss.67, 69 and 73) and the right to rescind regulated agreements (s.102). However, the section also creates a statutory agency in particular circumstances, and it is this aspect of the provision with which this appeal is particularly concerned.
35. Section 56(1) identifies three categories of negotiations. The first comprises those negotiations conducted by the creditor or owner in relation to the making of any regulated agreement. The second deals with negotiations conducted by a credit-broker in relation to goods sold or proposed to be sold by the credit-broker to the creditor before they become the subject of a debtor-creditor-supplier agreement as defined in s.12(a). The third is concerned with negotiations conducted by the supplier in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement.
36. A debtor-creditor-supplier agreement is defined by s.12 of the Act in these terms, so far as relevant:

"12. Debtor-creditor-supplier agreements.

A debtor creditor supplier agreement is a regulated consumer credit agreement being:

…

(b) a restricted-use credit agreement which falls within section 11(1)(b) and is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier, …"

37. This then takes one back to s.11(1)(b) which reads, so far as material:

"11. Restricted-use credit and unrestricted-use credit.

(1) A restricted-use credit agreement is a regulated consumer credit agreement –

…

(b) to finance a transaction between the debtor and a person (the "supplier") other than the creditor, …

…

and "restricted-use credit" shall be construed accordingly."

38. At trial the claimants argued that the negotiations conducted by Zenith were antecedent negotiations falling within s.56(1)(c) because they were conducted by Zenith in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement within s.12(b). Accordingly, they continued, those negotiations are deemed by s.56(2) to have been conducted by Zenith as agent for BCT. All these arguments have been maintained by Mr Butters on appeal.
39. As I have mentioned, BCT accepted at trial that the negotiations were indeed conducted by Zenith in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement but argued that that the agency deemed by s.56(2) has no relevance to s.140A.
40. On appeal, BCT maintained its position in relation to the relevance of the deemed agency but also seeks to contend that there was no debtor-creditor-supplier agreement in relation to the PPI, and that is the issue I must now address.
41. Mr Tolley's new argument ran as follows. Starting with s.11(1)(b), he accepted that the agreement between BCT and the claimants was a regulated consumer credit agreement but submitted that it is important to note that it was to finance two different transactions between the claimants and two other persons, namely (i) the transaction between the claimants and Zenith in relation to the windows and doors; and (ii) the transaction between the claimants and the insurers in relation to the PPI.
42. Second, and moving on to s.12(b), there remain two different suppliers, namely Zenith as the supplier of the windows and doors, and the insurers as the suppliers of the PPI. Further, and although there was a finding that the agreement in respect of the loan was made by BCT under pre-existing arrangements between itself and Zenith, there was no finding of any pre-existing arrangement between BCT and the insurers. Accordingly, Mr Tolley continued, there was no debtor-creditor-supplier agreement within the meaning of s.12(b) in respect of the PPI.
43. Turning now to s.56(1)(c), Mr Tolley submitted that Zenith was the only supplier which conducted any negotiations with the claimants. No negotiations were conducted with the claimants by the insurers. Further, the only negotiations conducted by Zenith in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement within s.12(b) were those which related to the supply of the windows and doors.
44. Finally, in addressing s.56(2), Mr Tolley argued that it follows from the foregoing that the only relevant negotiations were those conducted by Zenith in relation to the windows and doors. Accordingly, there can be no question of any deemed agency as between Zenith and BCT in relation to the PPI or the loan.
45. Mr Tolley supported these submissions by drawing attention to what he described as a telling distinction between the words of s.56(1)(a) and those of s.56(1)(c). While s.56(1)(a) refers to negotiations conducted by the creditor in relation to the making of any regulated agreement, s.56(1)(c) refers instead to negotiations conducted by the supplier "in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement within section 12(b) or (c)". Moreover, s.56(2) does not apply to a case falling within s.56(1)(a). It follows, he submitted, that a creditor should only be fixed with the wrongdoing of another person in respect of negotiations in relation to the making of any regulated agreement where such a conclusion would be required as a matter of the ordinary law of agency.
46. Mr Tolley sought to draw further support for his argument from the decision of Gray J in Black Horse Ltd v Langford [2007] EWHC 907, [2007] RTR 38. This case concerned s.56(1)(b), together with s.12(a) and s.11(1)(a). The defendant, Mr Langford, held a BMW motor car under the terms of a hire purchase agreement with the claimant, Black Horse, but wished to exchange it for a Lotus motor car. The credit-broker offering the Lotus for sale promised to take the BMW, pay off the sum outstanding under Mr Langford's existing hire purchase agreement and arrange a new hire purchase agreement for the Lotus. This credit-broker duly arranged that finance by selling the Lotus to a second credit broker who, in turn, sold it on to Black Horse. Mr Langford was then presented by the first credit-broker with a new hire purchase agreement with Black Horse, which he signed. Unfortunately the first credit-broker failed to pay off the outstanding sum on the hire purchase agreement for the BMW as it had promised. In these proceedings, commenced by Black Horse for that sum, Mr Langford argued that the first credit-broker had promised to discharge the balance and that by virtue of s.56(2) this promise was deemed to have been made on behalf of Black Horse. There was no dispute that s.56(2), if it applied, would have conferred on Mr Langford a cause of action against Black Horse. The issue was whether the relevant negotiations, that is to say those conducted by the first credit-broker, fell within the scope of s.56(1)(b) at all. The judge held they did not. Section 56(1)(b) applied only to those negotiations conducted by the credit-broker which actually sold or proposed to sell the goods to the finance company.
47. An analogous distinction should, Mr Tolley submitted, be drawn in this case between Zenith as suppliers of the windows and doors and the person conducting the antecedent negotiations, and the insurers as the suppliers of the PPI. The insurers did not conduct any negotiations with the claimants and so there can be no question of any application of s.56(2) in relation to the PPI or the loan in respect of the PPI.
48. Mr Butters deployed a considerable number of arguments in response to these submissions. He also objected to the point being taken at this stage on the basis that, had it been raised at trial, the claimants might well have addressed it by, for example, seeking to establish that there was indeed a pre-existing relationship between the insurers and BCT, a proposition for which there is certainly some support in the disclosure.
49. To my mind there is, however, a simple and complete answer to the point Mr Tolley now takes because, attractively though his submissions have been presented, I believe they focus on the wrong transaction and ignore the fact that the Zenith salesmen told the claimants that in order to secure the loan they needed to purchase the windows and doors they would need to purchase PPI. The claimants simply could not proceed with the purchase of the one without the other. Accordingly, even if the only transaction financed or proposed to be financed by a debtor-creditor-supplier agreement within s.12(b) was the agreement for the sale and supply of the windows and doors, all the representations made by the salesmen to the claimants about the PPI and the loan needed to purchase it were nevertheless made in relation to that transaction. It may be true to say that they concerned the purchase of the PPI, but that does not mean to say they did not also form part of the negotiations conducted by Zenith in relation to the sale and supply of the windows and doors, and in the particular circumstances of this case I believe they plainly did.
50. The Black Horse case does not in any way undermine this conclusion for it turned on the specific wording of s.56(1)(b) which makes clear it applies only to negotiations conducted by the credit-broker which actually sold or proposed to sell the goods to the finance company. By contrast, support for this conclusion can, I think, be drawn from the decision of this court in Forthright Finance Ltd v Ingate (Carlyle Finance Ltd, third party) [1997] 4 All ER 99. This case concerned a conditional sale agreement between the defendant, Mrs Ingate, and a finance company, Carlyle, under which Mrs Ingate agreed to buy a Fiat motor car. Mrs Ingate entered into the transaction on the faith of a promise by the dealer, a licensed credit broker, that it would buy her existing motor car, a Metro, and discharge the balance she owed to the claimant finance company, Forthright, under an earlier conditional sale agreement. The dealer went into liquidation without having paid off that balance. Forthright thereupon commenced proceedings against Mrs Ingate for the sum due to it on the Metro. Mrs Ingate submitted to judgment on that claim but execution was stayed pending the outcome of third party proceedings Mrs Ingate had brought against Carlyle based upon s.56 of the Act. She contended that Carlyle was liable for everything said by the broker by operation of s.56(2).
51. Mrs Ingate's claim succeeded before the district judge but, on appeal to the County Court, that decision was reversed, the judge holding that the antecedent negotiations did not relate to the goods to be sold, namely the Fiat, but to the Metro. On further appeal to this court, the decision of the district judge was restored. All the negotiations formed part of one transaction relating to the sale of the Fiat. Accordingly they constituted antecedent negotiations and Carlyle was liable for the dealer's promise. As Staughton LJ said at page 105:

"In my judgment, what s.56(1)(b) means is that there must be goods sold or proposed to be sold by the credit-broker to the creditor, which will form the subject matter of a debtor-creditor-supplier agreement. If that condition is fulfilled, one next inquires whether there were negotiations in relation to those goods. If there were, then all that was said by the credit broker in those negotiations is deemed to have been said on behalf of the creditor.

The next question is then a simple one of fact, were the negotiations in this case all relating to the goods to be sold? The answer in my judgment is that they were, because they were all part of one transaction. If the dealers had been asked by Mrs Ingate, "I no longer want the Fiat Panda, but please take my car and give me £8 and pay off what I owe on it" one can be fairly confident that the answer would be that, "That is not on offer. We have been negotiating about one transaction overall and that is what we have been talking about".

In my judgment the law is plain enough: one simply has to inquire whether all the negotiations form part of one transaction as a matter of fact. The facts are plain enough to lead to that conclusion in this case."

52. Similarly, Henry LJ explained at page 106:

"…. should, as a matter of law, the words "negotiations …. in relation to" the Fiat Panda be so narrowly construed as to exclude negotiations concerning what the district judge found to be part of the package, namely the Austin Metro? It seems to me that such a narrow interpretation of the words would not only be artificial but would fly in the face of the clear purpose of this Act to protect consumers."

53. He continued, at page 107:

"….in each case the negotiations so defined must relate to the goods sold by the dealer to the finance company, ie the Fiat Panda. These negotiations, for reasons that Staughton LJ and I have sought to explain, plainly did. Therefore, in my judgment, s.56 is to be construed widely. Section 56(1)(b) applies, and the third party are in my judgment liable under s.56(2) for the dealer's promise to discharge Mrs Ingate's debt under the conditional sale agreement."

54. In the Forthright Finance case the court was of course concerned with the meaning of the words "in relation to goods sold or to be sold by the credit-broker" in s.56(1)(b). But in my judgment similar considerations apply to the interpretation of the words "in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement" in s.56(1)(c). In the present case the purchase of the PPI formed part of the same package as the purchase of the windows and doors. The one came with the other in the sense that the claimants had no interest in the PPI save as a means to secure the loan they needed to purchase the windows and doors. In these circumstances it would run contrary to the purpose of the Act to exclude the negotiations concerning the PPI just as it would have run contrary to the purpose of the Act to exclude the negotiations concerning the Metro in the Forthright Finance case. In my judgment this conclusion is also supported by s.56(4), the terms of which I have set out above. The antecedent negotiations with Zenith began when the salesmen arrived and included all the representations they made thereafter, including the representations they made about the need for the PPI.
55. It follows from the foregoing that all of the negotiations conducted by Zenith in relation to the PPI are antecedent negotiations within the meaning of s.56(1)(c). So that brings me to s.56(2) and the question whether this means that those negotiations are deemed to have been conducted not only by Zenith on its own behalf but also as agent of BCT and, if so, for what purpose.
56. The words of s.56(2) would seem to provide a straightforward answer. They say that the negotiations are deemed to have been conducted by the negotiator as agent for the creditor, and that is so irrespective of what the position would have been at common law. We are concerned here with the misrepresentations which induced the claimants to take out the PPI policy and agree to take a loan of the size and on the terms they did. On the face of it, the deeming provision therefore rendered BCT liable for these misrepresentations, a cause of action which the claimants could have pursued had they commenced their proceedings in time. Indeed the Forthright Finance case proceeded on that very basis. The negotiations with Mrs Ingate fell within subsection (1)(b) and so were deemed to have been conducted by the broker as agent for Carlyle, and Carlyle was liable in respect of them.
57. The decision of this court in Jarrett and Anor v Barclays Bank Plc and Anor [1999] QB 1 also provides support for this interpretation. This case, heard with two others, concerned a claim brought by a married couple against two creditor banks in respect of an agreement to buy a timeshare in a villa in Portugal. The purchase was financed by loan agreements with the banks which the claimants contended were debtor-creditor-supplier agreements within the meaning of s.12(b) of the Act. They also contended they had been induced to enter into the agreements by a series of misrepresentations by agents for the vendors and that they were entitled to rescission of the agreements and damages pursuant to ss.56 and 75. The banks thereupon applied to strike the proceedings out for want of jurisdiction on the basis that they had as their object a tenancy of immovable property within the meaning of Article 16 of the Brussels Convention. The judge in the County Court held that was indeed their object and acceded to the application. This court allowed the appeal, holding that s.56(2) and s.75 conferred personal statutory rights to bring a claim for misrepresentation. As Morritt LJ (as he then was) explained at pages 16-17:

"In my view … these actions do not have as their object tenancies of immovable property. In each action the foundation for the claim against the bank under section 75 (and in the case of the Jarretts under section 56 also) is the debtor-creditor-supplier agreement. The contract has attached to it the personal statutory rights conferred by the Consumer Credit Act 1974 on the debtor. Of course the enforcement of those statutory rights is connected to or linked with the claims of the consumer against the supplier under the timeshare agreements but it is based on the debtor-creditor-supplier agreement not the timeshare agreement."

58. At the resumed hearing and faced with these decisions, Mr Tolley did not seek to maintain his submission that s.56(2) merely performs some kind of definitional function but instead submitted that neither the Forthright Finance case nor the Jarrett case is authority for the proposition that s.56(2) supports a cause of action for misrepresentation by a debtor against a creditor in relation to negotiations between the debtor and the supplier of goods about a finance transaction, still less a linked insurance transaction.
59. I am prepared to accept that neither the Forthright Finance case nor the Jarrett case is authority for the precise proposition framed by Mr Tolley. But I do not believe that takes BCT very far, for the Forthright Finance case concerned negotiations falling within s.56(1)(b) and the Jarrett case concerned negotiations about a tenancy of immovable property. They do, however, recognise that such negotiations are deemed by s.56(2) to have been conducted by the negotiator in the capacity of agent of the creditor as well as in his actual capacity and may render the creditor liable for misrepresentation. Section 56(2) applies to negotiations falling within s.56(1)(b) or (c) and in the present case I am satisfied that the negotiations conducted by Zenith with the claimants falling within the scope of s.56(1)(c) included the representations concerning the need for the PPI. On the face of it these representations therefore constitute "any other thing done (or not done) by, or on behalf of, the creditor" within the meaning of s.140A(1)(c). Whether they are nevertheless excluded from consideration under s.140A is a matter which I address later in this judgment in considering the misrepresentation issue.

Plevin v Paragon

60. The second way in which the claimants seek to attribute the acts and omissions of Zenith to BCT is based upon the judgment of this court in the Plevin case [2013] EWCA Civ 1658. The decision concerned two appeals, the second of which arose from a claim by Mrs Plevin against an independent finance broker called LLP and a finance company referred to as Paragon. In broad terms, Mrs Plevin was approached by LLP who, after carrying out an assessment, recommended she should take out a £34,000 loan from Paragon repayable over 10 years and an additional loan of nearly £6,000 to pay for a five year PPI plan. Mrs Plevin compromised her claim against LLP but pursued her claim against Paragon contending, inter alia, that LLP had failed to carry out a proper assessment of demands, needs or suitability and that Paragon was responsible for this failure because LLP was acting on its behalf within the meaning of s.140A(1)(c). The trial judge rejected the claim.
61. On appeal to this court it was argued on behalf of Paragon that the general purpose of s.140A(1)(c) was to confine the examination of conduct to that of the creditor, and to extend it to others only where some regulatory or other responsibility of the creditor had been delegated to another or, if not, where the existence of legal liability for that other's conduct arose by reason of agency or something akin to agency.
62. A much broader interpretation was contended for by Mrs Plevin. Briggs LJ summarised her argument in this way at [48]-[49]:

"48. For Mrs. Plevin, Mr. Strachan submitted that the phrase "on behalf of" was designed to bring within the purview of the court's consideration any relevant act or omission by a person who, in a non-technical sense, would be viewed by the man on the Clapham omnibus as having played some part in the bringing about of the credit agreement for the creditor. Thus it typically applied to any intermediary paid a commission for introducing the customer to the creditor, or (which may be the same thing) procuring the business represented by the credit agreement (and any related agreement) for the creditor. Thus it applied to the acts and omissions of any intermediary, whether acting as agent for the creditor or as a mere broker without an agency relationship with either party to the credit agreement, at least where the broker received commission from (or via) the creditor.

49. Put shortly, the difference between the rival submissions is that Mr. Elliott submitted that "on behalf of" is designed only to capture conduct (including omissions) for which the creditor can be said to bear or share some responsibility, whereas Mr. Strachan submits that it captures all conduct beneficial to the creditor, in the sense that it played some material part in the bringing about of the transaction giving rise to the allegedly unfair relationship. Proof that the person whose conduct is prayed in aid received a commission from, or via, the creditor brings on board the whole of that person's conduct, within section 140A(1)(c)."

63. Briggs LJ (with whom Beatson and Moses LJJ agreed) was persuaded that the broader approach was correct, essentially for the following reasons. First, the phrase "on behalf of" has to be construed purposively and in context. The Act exists for the protection of consumers, and the earlier regime for the reopening of extortionate credit bargains was regarded as having been too technical, and as having set the bar too high. Second, the jurisdiction is designed to enable the court to intervene in, and put right, an unfair relationship, by reference to causative factors which are broadly defined. Third, it is not a part of the purpose behind s.140A(1) to limit the court's consideration of conduct to that for which the creditor has incurred some legal liability to the debtor, whether under the general law or by means of a statutory code. And finally, the imposition of the reverse burden of proof in s.140B(9) is a powerful indication of a general parliamentary intention to confer a broad rather than a narrow measure of protection upon debtors.
64. The claimants in this case did not adopt a similar argument in support of their claim at trial or, indeed, at the outset of this appeal, and were instead content to base their claim upon the meaning and effect of s.56(1) and (2) of the Act. However, following the decision of this court in the Plevin case, they seek to do so now.
65. In my judgment there can be no doubt that the acts of Zenith were done "on behalf of" BCT as that phrase has been construed by this court in the Plevin case. All of the representations made by the salesmen played a material part in bringing about the credit agreement for BCT. The loan enabled the claimants to purchase the windows and the doors and take out the PPI policy. BCT has received a commission in respect of the sale of the PPI policy and it has received interest on the part of the loan which relates to it.
66. Mr Tolley, while not conceding the point, did not advance any submission to the contrary. Instead he submitted that if we were to allow the claimants to take the point then the only available course would be to remit the case for re-trial in the County Court as to whether this rendered the relationship unfair, and, if it did, what the consequences should be. In that regard he drew our particular attention to that part of the judgment of Briggs LJ in the Plevin case in which he explained that the broad interpretation does not necessarily mean that, where misconduct of a third party has been demonstrated, the creditor necessarily "carries the can", for there may be two "escape routes":

"60. …. The first is that the court may conclude that conduct "on behalf of" the creditor by a person who procures a transaction, even if blameworthy, has not in fact rendered the relationship unfair. For example, a complete failure to conduct a demand and needs assessment or to consider suitability may nonetheless be followed by a transaction leading to a relationship which is perfectly fair to the debtor.

61. The second escape route arises from the fact that the court's powers to intervene upon an unfair relationship are plainly discretionary. Section 140A(1) provides that "the Court may make an order… if it determines that the relationship between the creditor and the debtor… is unfair to the debtor…". There may well be cases where the conduct of some third person, for whom the creditor had no responsibility of any kind, or in respect of whose conduct the creditor conducted diligent monitoring which failed to reveal the relevant misbehaviour, renders the relationship objectively unfair, but in a way which is so divorced from any responsibility of the creditor as to make it inappropriate to grant discretionary relief. This may be, for example, because the debtor knew about the misconduct, but the creditor did not. Another example would be a case where the debtor has a perfectly adequate remedy against the third person, either because that person has some legal liability or enforceable regulatory obligation to the debtor, together with the resources with which to discharge it, such that the court may properly leave the debtor to enforce that remedy, rather than reopen the relationship with the blameless creditor."

67. Mr Tolley focused on the second of these escape routes in the course of his submissions to us and contended that not only had BCT acted in an entirely blameless fashion but that here the claimants did indeed have at least one alternative remedy available to them which they chose not to pursue. These are again matters to which I must return in addressing the general topic of unfairness and the appropriate remedy.

Related agreement

68. I have set out the key provisions earlier in this judgment and so can deal with this issue quite shortly. In my judgment Mr Tolley's fundamental point is a good one. Section 140C(4)(b) of the Act provides that references to an agreement related to a credit agreement are references to a linked transaction in relation to the main agreement. The concept of a linked transaction is then defined by s.19. However, there is no reference in s.56 to the concept of a linked transaction and so the deemed agency provisions it contains do not apply to make the creditor responsible for negotiations conducted by a broker in relation to such a transaction. In my judgment this argument therefore adds nothing to the claimants' case.

Misrepresentation

69. That brings me to the first of the various issues which arise in this case concerning the scope of the fairness assessment, namely BCT's contention that the judge was wrong to take into account the misrepresentation made by Zenith. Mr Tolley advanced four submissions in support of this contention which I will address in turn.
70. First, Mr Tolley submitted that the Act provides specific remedies for misrepresentation such that there is no need to provide an alternative remedy for the same type of wrong by means of s.140A. Specifically s.75 reads, so far as material:

"75. Liability of creditor for breaches by supplier.

(1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.

(2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under subsection (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.

(3) Subsection (1) does not apply to a claim –

(a) under a non-commercial agreement,

(b) so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding £100 or more than £30,000,

…

(4) This section applies notwithstanding that the debtor, in entering into the transaction, exceeded the credit limit or otherwise contravened any term of the agreement.

(5) In an action brought against the creditor under subsection (1) he shall be entitled, in accordance with rules of court, to have the supplier made a party to the proceedings."

71. Mr Tolley continued that in the present case the claimants did originally make a claim for misrepresentation under this section. However, the claim was abandoned because it was time barred. Nevertheless, they now seek to use s.140A as a vehicle for pursuing the same claim, and the judge ought to have held that s.140A cannot be used in this way.
72. I find myself unable to accept this submission. Section 75 imposes upon the creditor under a debtor-creditor-supplier agreement liability for misrepresentations and breaches of contract by the supplier provided that the particular conditions set out in the section are satisfied. But I can see no reason whatsoever for concluding that simply because this section provides a remedy for particular misrepresentations (or breaches) they are to be excluded from an assessment under s.140A. The inquiry under s.140A is focused upon the relationship between the debtor and the creditor and the court must consider whether it is unfair because of one or more of the matters identified in s.140A(1) and having regard to all matters the court thinks relevant. There is nothing in this provision to suggest that the court's consideration is limited to those matters in respect of which no alternative claim can be pursued.
73. Mr Tolley next submitted that there is no valid basis for applying the deemed agency provisions of s.56 to the quite different type of claim under s.140A. He pointed out that the unfair relationships provisions do not refer to the concept of antecedent negotiations established by s.56(1) but instead contain a separate provision for the attribution of responsibility to the creditor in respect of the activities of others, namely s.140A(3) which refers to the activities of an associate, a term defined in s.184. Moreover, he continued, the wording of s.140A(3) is more flexible than that of s.56(2) in that it permits the court not to treat the conduct of an associate as if done by the creditor "to the extent that it is not appropriate to do so".
74. I accept that there is no reference in s.140A to s.56(2). On the other hand, there is nothing in the wording of s.56(2) to suggest any legislative intent to limit its application so as to exclude s.140A. Moreover, the words in s.140A(1)(c) "any other thing done (or not done) by, or on behalf of, the creditor" are entirely apposite to include antecedent negotiations falling within the scope of s.56(1)(c) and which are deemed by s.56(2) to have been conducted by the supplier as agent of the creditor. Indeed the purpose of s.56(2) is to render the creditor responsible for such statements made by the negotiator and so it seems to me wholly consistent with the scheme of the Act that, where appropriate, they should be taken into account in assessing whether the relationship between the creditor and the debtor is unfair. In expressing this view I recognise that s.140A(3) makes specific provision in respect of the activities of associates or former associates of the creditor but, as Mr Butters submitted, s.140A(1)(c) shows that this is clearly not exhaustive of the circumstances in which responsibility may be attributed to a creditor for the conduct of others.
75. Mr Tolley then turned to the decision of this court in Harrison v Black Horse Ltd [2011] EWCA Civ 1128, [2012] Lloyds Rep IR 521. This case concerned a claim by Mr and Mrs Harrison to recover premiums they had paid for PPI which they had been sold by the lender as agent for the insurer at the same time as they negotiated a loan. They contended that the relationship with the lender was unfair principally because it failed to disclose that it received a very large commission from the insurer on the sale of the PPI. This court dismissed an appeal from the decision of the trial judge rejecting the claim because the operative regulatory regime (the ICOB rules then in force) did not require the disclosure of the existence or amount of any receivable commission. Tomlinson LJ (with whom Lord Neuberger MR and Patten LJ agreed) put it this way at [58]:

"I struggle however to spell out of the mere size of the undisclosed commission an unfairness in the relationship between lender and borrower. Moreover the touchstone must in my view be the standard imposed by the regulatory authorities pursuant to their statutory duties, not resort to a visceral instinct that the relevant conduct is beyond the Pale. In that regard it is clear that the ICOB regime after due consultation and consideration does not require the disclosure of the receipt of commission. It would be an anomalous result if a lender was obliged to disclose the receipt of a commission in order to escape a finding of unfairness under section 140A of the Act but yet not obliged to disclose it pursuant to the statutorily imposed regulatory framework under which it operates."

76. In the course of his judgment Tomlinson LJ considered an earlier decision (Yates v Nemo Personal Finance, a decision in the Manchester County Court dated 14 May 2010) in which an independent broker introduced borrowers to a lender and falsely represented to them that taking out PPI was a condition of being granted a loan. The borrowers were told that the broker would be paid a commission, including a commission from the lender based upon a proportion of the premium for the PPI, but they were not told its size. In fact nearly 60% of the PPI premium was retained by the lender as commission, of which around half was paid to the broker. The judge considered that the real problem was the behaviour of the broker who told the borrowers that they had to purchase the PPI to secure the loan and failed to disclose the extent of his interest in the transaction. However, the judge also held that the lender had failed to satisfy him that its relationship with the borrowers was fair, essentially because the lender had a duty in the interests of fairness to satisfy itself that the broker had disclosed his interest in the transaction to the borrowers. That duty had not been discharged and so the relationship was unfair. Tomlinson LJ then said this at [31]:

"Again I am not sure that I follow this, but the decision is in any event of little assistance to us in the present enquiry. It is sufficient to note, as Mr Nicholas Elliott QC for Black Horse accepted, that plainly it is not a pre-requisite to a finding of an unfair relationship that there has been in the course thereof a misrepresentation. Indeed, the circumstance that there has been a misrepresentation in the course of a relationship is likely, I should have thought, ordinarily to be irrelevant to the question whether that relationship is unfair. A misrepresentation is likely to generate an entirely different remedy, unavailable in Yates because of the insolvency of the broker. "

77. Founding himself on this passage, Mr Tolley submitted that Judge Hampton should have concluded in this case that Zenith's misrepresentation ought not to be taken into account in assessing the fairness of the relationship between BCT and the claimants under s.140A. It was, he submitted, an irrelevant consideration.
78. In my judgment Mr Tolley seeks to place far more weight upon this observation of Tomlinson LJ than it can possibly bear. I recognise that a misrepresentation may not create or even contribute to an unfair relationship but I do not understand Tomlinson LJ to have been suggesting that it can never do so. Indeed it seems to me that it plainly can. In this regard it is important to have in mind that the court must consider the whole relationship between the creditor and the debtor arising out of the credit agreement and whether it is unfair having regard to one or more of the three matters set out in s.140A(1), which include anything done (or not done) by or on behalf of the creditor before the making of the agreement. A misrepresentation by the creditor or a false or misleading presentation of relevant and important aspects of the transaction seem to me to fall squarely within the scope of this provision.
79. Moreover, the basis of the decision in the Harrison case was that the ICOB rules then in force did not require the disclosure of the existence or amount of any receivable commission. The lender had complied with the statutorily prescribed regulatory regime and so this court could not see from where the unfairness in the relationship was to be derived. By contrast, in the present case Zenith told the claimants, wrongly, that in order to secure the loan they needed to take out the PPI. But for this misrepresentation and associated breaches of the ICOB rules the claimants would not have taken out the PPI. Further, these negotiations were conducted as agent for BCT and resulted in BCT receiving commission on the sale of the PPI and interest on that part of the loan which relates to it. These facts are very different from those of the Harrison case and give rise to quite different considerations.
80. The final matter upon which Mr Tolley relied under this heading was limitation. He contended that an important consequence of the judge's approach in a case such as this, where limitation in respect of a misrepresentation is time barred, is that it is highly likely that a party in the position of BCT will have no effective recourse against the wrongdoer.
81. Mr Tolley developed this submission by reference to s.75 of the Act. If a debtor brings a claim against a creditor under s.75(1) then the creditor is entitled (subject to contrary agreement) to be indemnified by the supplier (s.75(2)) and to have the supplier joined as a party to the proceedings (s.75(5)). Similarly, if a debtor seeks to rely on s.56(2) in order to make creditor liable in respect of a finance-related misrepresentation by the supplier, then normally it would be possible for the creditor to bring proceedings for a contractual indemnity or a contribution against the supplier. However, Mr Tolley continued, by upholding the debtor's claim under s.140A on the basis of a misrepresentation by the supplier, but after the expiry of the limitation period in respect of the claim for misrepresentation, the creditor is left in the position that he has no available recourse against the supplier.
82. I am not persuaded that the issue of limitation is a reason to construe s.140A so as to exclude from the fairness assessment what would otherwise be relevant misrepresentations attributable to the creditor. The claim for an order under ss.140A-B is made on the basis that the relationship between the creditor and the debtor is unfair to the debtor because of one or more of the matters set out in s.140A(1) and having regard to all matters which the court thinks relevant. The focus of the inquiry is therefore the relationship between the parties and if, as here, it is a relationship which continues to subsist then the court must have regard to all matters it considers relevant even if some of them occurred more than 12 years before the date of the claim (this being the limitation period for an action on a specialty). As Mr George Leggatt QC (as he then was) observed when sitting as Deputy Judge of the High Court in Patel v Patel [2009] EWHC 3264, [2010] 1 All ER (Comm) 864 at [64]:

"64. It would, however, be an artificial and unsatisfactory exercise if, in determining what is fair to the debtor, the court were permitted to have regard only to matters which occurred in the 12 years before the debtor's application was made and was required to shut its eyes to agreements between the parties and other relevant matters which occurred before that time. Such a partial enquiry into the course of the relationship between the creditor and the debtor would also be contrary to s.140A(2), which provides that the court "shall have regard to all matters it thinks relevant" (my emphasis) – impliedly without limitation in time. In my opinion the possibility of such a time-limited assessment does not arise on the proper interpretation of the statutory provisions. As I construe s.140A, the question whether the relationship between the creditor and the debtor is unfair to the debtor, upon the answer to which the power to make an order under s.140B depends, is a single question which admits of a 'yes' or 'no' answer that has to be determined as at a particular point in time. However, in determining whether, at the relevant date, the relationship is or is not unfair, the court is required to have regard to certain matters specified in s.140(A)(1) and to all other matters it thinks relevant, whenever those matters occurred. There is no possibility, therefore, if the court is entitled to make the determination of fairness at all and is not barred by limitation from doing so, of restricting the temporal scope of the enquiry."

83. If and in so far as the creditor wishes to protect itself against claims made against it arising from the acts and omissions of a supplier as a result of the operation of s.56 then, as Mr Butters submitted, an obvious way to do so is by way of a contractual indemnity.

Breaches of the ICOB rules

84. That brings me to the ICOB rules. Here Mr Tolley submitted the judge fell into error in finding that the ICOB rules had any relevance to the claim based upon s.140A for the following three reasons. First, the ICOB rules simply did not apply to BCT. Second, there are specific provisions in the Financial Services and Markets Act 2000 ("FSMA") dealing with liability for the acts of appointed representatives. But there is nothing in FSMA which would render a lender vicariously liable for the conduct of an insurance intermediary such as Zenith which was neither its common law agent nor an appointed representative within the meaning of s.39 of that Act. Third, in determining whether a claim is available under s.140A one ought to take into account the availability of alternative remedies in respect of a breach of the ICOB rules by the supplier (or broker). In the present case the claimants could have made a claim under the Financial Services Compensation Scheme (the "FSCS") yet they did not do so and no explanation for that failure has ever been provided.
85. I accept that the ICOB rules do not apply to BCT but their relevance to the present case is that they provide a benchmark or, as Tomlinson LJ put it in the Harrison case, a touchstone, against which the conduct of Zenith can be measured. Zenith's conduct fell short of that benchmark in a number of key respects: first, it induced the claimants to believe that they needed to take out the PPI policy in order to secure the loan; second, it sold the claimants a PPI policy, the terms of which were unsuitable for them; and third, it failed to take proper and reasonable steps to ensure the PPI met the claimants' demands and needs. Section 140A is framed in broad and general terms which provide the court with considerable flexibility in considering unfairness and I do not believe the judge can be criticised for taking this conduct of Zenith into account in the way that she did. Nor, it seems to me, is BCT assisted by Mr Tolley's second and third submissions, neither of which was advanced at trial. It may be that there is nothing in FSMA which would render BCT liable for the conduct of Zenith, but that is nothing to the point. The negotiations were conducted by Zenith as agent of BCT by operation of s.56(2) and, in any event, as this court explained in the Plevin case, constituted things done (or not done) by or on behalf of BCT within the meaning of s.140A(1)(c). As for the possibility of a claim for compensation from the FSCS, this not having been raised by BCT at trial, it was not addressed by the claimants or the judge and I consider it too late to raise it now. But in any event I am doubtful that it could have had a bearing on the assessment of fairness, depending as it did upon the nature of the relationship between the claimants and BCT.

The need to take into account all relevant circumstances

86. Mr Tolley submitted that if this court were to hold that it was relevant to take into account against BCT the misrepresentation and breaches of ICOB by Zenith then the judge was nevertheless wrong to regard the existence of such factors as decisive in the claimants' favour. In particular, Mr Tolley continued, she failed to take into account the following highly material factors which showed that the relationship was not unfair. First, there was nothing to suggest that BCT acted culpably in its own dealings with the claimants. Second, BCT's communications to the claimants made clear that the purchase of the PPI was not a prerequisite for the grant of a loan. Third, there was no question of the interest rate applicable to the loan having been artificially reduced by BCT on the basis that it was making additional profit in respect of the PPI premium. Fourth, BCT did not receive the PPI premium itself. Fifth, there was no question of any knowledge by BCT of the claimants' misapprehension that they had to take out PPI in order to secure the loan. Sixth, there was no criticism of the terms of the loan. Finally, there was no criticism of BCT's conduct after the loan was concluded.
87. The court must consider the relationship between the debtor and the creditor arising out of the credit agreement and decide whether that relationship is unfair because of one or more of the matters identified in s.140A(1) having regard to all matters it considers relevant. This necessarily involves a consideration of the position of the debtor and that of the creditor. Further, if there are matters relied upon by the debtor which point to the relationship being unfair the court must clearly take into account any countervailing factors or other matters which put those matters relied upon by the debtor into perspective and so may affect the assessment. In the present case, the matters which were said to render the relationship unfair were clear. Zenith's conduct in representing that the claimants had to take out PPI in order to secure the loan they needed to purchase the windows and doors was carried out on behalf of BCT for the purposes of ss.140A and B. But for that conduct the claimants would not have taken out the PPI, and BCT would not have had the benefit of the interest payments on the additional loan or received the commission on the sale of the PPI that it did. The further matters now relied upon by Mr Tolley clearly did not contribute to the unfairness of the relationship but nor, it seems to me, do they diminish or qualify the impact of the matters relied upon by the claimants as giving rise to that unfairness. In my judgment it is not incumbent upon the court carrying out the assessment to identify all those matters which do not affect the assessment one way or the other and yet that, it seems to me, is what Mr Tolley is criticising the judge for failing to do.
88. It simply remains to consider Mr Tolley's objection to the decision in the Plevin case being relied upon by the claimants at this stage and his submission that if we were to consider the decision relevant then we should remit the matter to the County Court to allow BCT to argue that discretionary relief should not be granted to the claimants because the conduct complained of was not known to BCT and because the claimants had a perfectly adequate remedy against Zenith or at least the FSCS on its behalf. To do so would give BCT the opportunity to take advantage of the second possible escape route identified by Briggs LJ.
89. In my judgment we should allow the claimants to rely upon the decision in the Plevin case and we should not remit the case to the County Court. The interpretation by this court in Plevin of the words "on behalf of" in s.140A(1)(c) provides the claimants with another basis for attributing the conduct of Zenith to BCT, but nothing more. All of the arguments which BCT would deploy were we to remit the case could have been advanced on its behalf at the trial. Consequently, if, as I believe to be the case, there is no basis for criticising the assessment by the judge of the fairness of the relationship between BCT and the claimants or the exercise by her of her discretion to order the limited relief that she did, there is no proper reason to remit the case for that exercise to be carried out all over again.

Conclusion

90. For all the reasons I have given I would dismiss the appeal.

Lord Justice Underhill

91. I agree.

Lord Justice Moore-Bick

92. I also agree.