National Westminster Bank plc v Story and Pallister
Court of Appeal 7 May 1999
Anthony
Story and Mary Pallister had made arrangements with the bank to lend them a
total of £35,000 on three separate credit facilities – a £15,000 business
loan to Mr Story, and two loans, of £5,000 and £15,000, made to Mr Story and
Ms Pallister jointly. The loans were to fund Mr Story’s carpentry business.
The issue here was whether there was a single agreement of £35,000, meaning
that the loan was exempt from the Consumer Credit Act 1974, or whether there
were three separate agreements, each of no more than £15,000, the then limit
for regulation under the Act.
The
intentions of both sides in making the arrangements were unclear. Section 18
defines a multiple agreement as one where the agreement comprises different
categories of credit. The court held that all the facilities were of the same
category, being unrestricted-use credit, so the agreement was non-regulated and
thus enforceable against the debtors.
Comment: this strange case was incompletely reported and may well have been wrongly decided.
Mr Story has his own website on the subject - www.ruinedbynatwest.com, which also has a link to the views of Francis Bennion (parliamentary draftsman of the 1974 Act)