JP Morgan Chase Bank, National Association v Northern Rock (Asset Management) Plc
2014
CHANCERY DIVISION
United Kingdom
CORAM
- SIMON MONTY QC
Areas of Law
- Commercial Law
- Contract Law
2014
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
The court dealt with the interpretation of section 77A of the Consumer Credit Act 1974, focusing on whether non-compliant statements could be considered valid statements and when the period of non-compliance should commence. The court concluded that non-compliant statements do not constitute statements under section 77A. Consequently, the period of non-compliance starts the day after the last possible date on which a compliant statement could have been served. This determination affects how creditors handle statements under fixed-sum credit agreements.
JUDGMENT
SIMON MONTY QC:
The statutory framework
By section 77A of the Consumer Credit Act 1974 ("the 1974 Act"), a section introduced by section 6 of the Consumer Credit Act 2006 ("the 2006 Act"), creditors are required to provide debtors with statements in relation to regulated fixed-sum credit agreements.
The form and contents of such statements are prescribed by the Consumer Credit (Information Requirements and Duration of Licences and Charges) Regulations 2007 ("the Regulations").
Section 6 of the 2006 Act, and thus section 77A, came into force on 1 October 2008. The Regulations came into force on the same day.
Section 77A was further amended by the Legislative Reform (Consumer Credit) Order 2008 ("the 2008 Order"). By virtue of the transitional provisions in article 5(1) of the 2008 Order, section 77A applies to agreements "whenever made".
Section 77A imposes different requirements for the provision of statements, depending on when the relevant agreement was made.
I will set out the relevant provisions in full later in this judgment, but in summary the position is as follows.
For agreements made on or after 1 October 2008, the first statement must cover a period of no more than one year which must begin either with the day the agreement was made or with the day the first movement occurs on the debtor's account. For agreements made before 1 October 2008, the first statement must cover a period beginning no later than 1 October 2008 and ending no later than 30 September 2009. In each case, subsequent statements must relate to consecutive periods not exceeding one year. Both the first statement and each subsequent statement must be given to the debtor within 30 days beginning with the day after the end of the period to which the statement relates.
If a creditor fails to give a statement, a "period of non-compliance" commences, during which (a) the creditor cannot enforce the agreement, (b) the debtor has no liability to pay interest calculated by reference to the period of non-compliance, (c) the debtor has no liability to pay any default sum which would have become payable during the period of non-compliance or after the period ends in connection with any breach of the agreement during the period.
The issue and the parties' contentions in summary
The issue to be determined in this case is as follows: where a creditor has provided the debtor with a statement which fails to set out the information required by the Regulations ("a non-compliant