English and Welsh Courts - Miscellaneous

IN THE MEDWAY COUNTY COURT

		Claim No. 3YL29257 47-67 High Street Chatham Kent
		14th October 2013

1. THE DISTRICT JUDGE: On or about 13^th May this year Mr Lee Heaver issued a claim in the county court against Santander Cards UK Limited, arising out of a credit agreement which Mr Heaver entered to originally with GE Capital Bank in June 2001, subsequently transferred to the defendant in or around January 2009. The agreement in question is a running credit store card account. Mr Heaver, in his claim form and again in the particulars of claim that accompany it, pleaded that at all material times the contract was subject to the Defendant's standard terms and conditions, which could be varied from time to time, and that through the course of the agreement the defendant added default charges for the claimant's failure to make the minimum payment on the due date. The default charges were provided for in its standard terms.
2. He attached a schedule to the claim form setting out the charges made for failures by him to make the minimum payment on the due date. They were made on a range of dates from 11^th September 2001 to 14^th May 2012. The charges were, in the first five instances, £15 and subsequently £12. Mr Heaver seeks the repayment of those sums, which he tells me totals £447, together with interest thereon of £630.35. This is the interest applied by the defendant to these late payment charges and added to the account. He also seeks interest under Section 69 of the County Court Act 1984.
3. A defence has been filed by Santander Cards UK Limited. However, prior to allocation of the case to track the defendant has now issued an application for the claim to be struck out, pursuant to the Civil Procedure Rules 3.4, on the ground that it is an abuse of process or fails to disclose real grounds for bringing the claim, and for summary judgment pursuant to CPR 24.2 on the grounds that there is no real prospect of the claimant succeeding at trial with the claim and there is no other reason for a trial.
4. The Application is dated 5^th August 2013 and was supported by a witness statement bearing the same date from a Mr Russell Jon Kelsall of Squire Sanders, solicitors for Santander. Mr Kelsall, in his statement, says that from Mr Heaver's claim it appears that he alleges that various charges applied under the agreement in accordance with the terms are wrongly added and unenforceable, or not binding, because they are penalties at common law, and unfair under the Unfair Terms in Consumer Contract Regulations 1999. There is some rather convoluted point about the fact that Mr Heaver does not seek repayment of the default charges and the pleading simply seeks a declaration of the default charge has been wrongly applied. Counsel for Santander has not raised that point today. I think rightly so because, quite frankly, it is such a minor issue; a technicality only it would not have stood in the way of the court allowing the claimant to proceed, if there were grounds to do so.
5. The grounds on which Santander have pursued their application today are twofold: firstly that the evidence adduced by Mr Kelsall in his statement is so clear that the sums applied to this account, in respect of late payment of the minimum charge, are a genuine pre-estimate of loss and accordingly not a penalty that there are no real prospects of Mr Heaver succeeding on that part of his claim; and, secondly that the unfair terms in contract regulations point is dealt with by the decision of the Supreme Court in the case of Office of Fair Trading v Abbey National plc & others, where the OFT's position on bank charges were rejected and the Supreme Court found that default charges were part of the monetary price, or remuneration payable under a contract, and therefore not amenable to challenge as unfair under the UTCCR.
6. In response Mr Heaver says that his claim covered not only the two points that I have just set out, but also included a claim for reimbursement of the sum of these default charges on the basis that they had been applied to his account following him being mis-sold a policy of protection insurance. The claims he made when he became unemployed under that insurance policy were rejected, ergo he was not in a position as an employed person to pay the minimum charges under the credit card on time and accordingly the default charges were applied to his account. If he had not been mis-sold that policy he says these charges would not have applied with his account. He refers me to paragraph (9) of his particulars of claim, which reads:

"At all material times the Agreement was subject to additional account cover charges applied by the defendant and to interest applied on these charges. The defendant has earlier accepted that this policy was mis-sold with a judgment being made against the defendant on 24^th November 2011."

Mr Heaver goes on to point out that the decision of the Supreme Court in OFT v Abbey National plc & others, was in relation to overdrawn current accounts and not store credit card accounts of this type. He makes a submission that £15 and £12 cannot be a genuine pre-estimate of loss as a result of a default of the type he has engaged in because these days, to quote him exactly, "These letters are produced on the press of a computer button and can only be a matter of a few pence." Hopefully I summed up Mr Heaver's arguments correctly. He is nodding at me so I say I have done, and I thank him for that.

7. I remind myself at the outset of this judgment that I must deal with this case in accordance with the overriding objective set out at CPR 1.1. I have got to deal with the case justly and at a proportionate cost. To do that I have got to, so far as practical: ensure that the parties are on an equal footing, save expense, deal with the case in ways which are proportionate to the amount of money involved, the importance of the case the complexity of the issue and the financial position of each party, ensure that the case is dealt with expeditiously and fairly, allot to it an appropriate share of the courts resources - whilst taking into account the need to allot resources to other cases - and enforce compliance with the rules, practice corrections and orders.
8. The relevant rules for me, beyond 1.1, I have already made some reference to but I will just quickly refer again to 3.4; that provides that the court may strike out a statement of a case who appears in the court, the statement of case discloses no reasonable grounds of bringing or defending the claim, it is an abuse of the court's process, or that there has been a failure to comply with the rule practice direction or court order. It is quite clear that the court can act on its own motion in this set of circumstances and does not have to await an application by the other party to an Action.
9. Part 16 is also important for my consideration because it deals with the contents of the particulars of claim. 16.4(1) says:

"Particulars of claim must include a concise statement of facts on which the claimant relies."

The practice direction to Part 16 assists further, in that regard, in setting out what must be included in the particulars of claim. It says:

"All particulars of claim must include the matters set out in Rule 16.4."

It then sets out what must be included in the particulars in certain types of claim. It makes it absolutely clear that where a claim is based on any form of agreement there must be a clear pleading of the agreement and the breach of it.

10. I had a look at the case prior to hearing submissions and prior, indeed, to seeing Mr Heaver's witness statement of 8^th October, which had not reached the court file until sometime earlier this morning. When I read the particulars of claim over the weekend I had no inkling that included in the claim was the head of damage I have just referred to arising from the miss-selling of PPI. It is not explicitly stated by Mr Heaver in his particulars of claim that even if his claims in respect of penalties and unfair terms fail he still has a claim because charges were inappropriately applied to this account arising from the miss-selling of the policy. His particulars of claim therefore is in breach of that rule that I have just referred to. I am reinforced by my assessment of the particulars of claim because Mr Ralston, counsel for the defendant, also laboured under the same misapprehension until he came to Court and read the latest statement by Mr Heaver.
11. In any event it is common ground that Mr Heaver received a settlement from Santander in respect of the miss-sold policy. In a statement addressed to Mr Heaver produced on 14^th October for this hearing, Mr Heaver says:

"I acknowledge that Santander paid £2,500 in full and final settlement of my PPI claim."

It must be the case, therefore, that he accepts that money in full and final settlement for anything relating to the PPI claim, including charges added to his account. Accordingly I find that he is not in the position to re-open that issue, even if I am wrong in respect of the points I have made concerning the pleading itself. However, I am confident I am not wrong in respect of the pleading, and I have already said that in these circumstances the court has a power to strike out a claim for that reason.

12. I have taken into account the overriding objective in terms of, particularly the issues of allotting a proportionate amount of resources and making sure rules are complied with. I find that it would be proportionate just unfair to strike out the claim, strike out the statement of case, on the basis that Part 16 has not been complied with.
13. In relation to the claim concerning the UTCCR, I accept the argument that whilst the decision of the Supreme Court in OFT v Abbey National plc does not explicitly relate to credit store card agreements of the type that is the subject of this action, there can be no material difference between the position with regard to default charges on an overdrawn current account, and charges for late payment under a running credit store card account. I find that it is the law that the charges applied in default are part of the core contract relating to price paid by the claimant for entering into the contract, and therefore are not amenable, not impeachable via the UCCTR, and that Mr Heaver's claim in respect of these charges based on the UCCTR is therefore bound to fail.
14. I am also satisfied on all of the evidence I have received, including that from Mr Kelsall that the claim, in respect of the penalty charges, is also bound to fail. I am told that the £15 originally, £12 subsequently, in my view, is not an unrealistic pre-estimate of loss incurred by the claimant organisation in dealing with default. It is not just simply a matter of pressing a button. There has to be some supervision of the process. The servicing of the computer itself will incur costs. And it is not as is said by Mr Kelsall, simply a question of sending a letter, it is a question of following up the matter; pursuing the matter by telephones, following the matter up by default letters and the like.
15. I consider the claimant has no real prospect of succeeding with his claim for the reasons which I hope I have set out in full during the course of this judgment. In the circumstances I am bound to exceed to the defendant's application to strike out the claim, and do so. That is my judgment.

(End of judgment)

(Discussions as to costs followed)