Queen's Bench Divisional Court 3 March 1993 (Times Law Reports 15 March 1993)

A building society, which sent a child a leaflet advertising loans, was not guilty of sending a minor a document inviting him to borrow money with a view to financial gain, because the leaflet specified that loans were not available to applicants under the age of 18.

The Court so held, allowing the Building Society's appeal by way of case stated against its conviction by Leicester Justices on 9 April 1992 of sending a minor a document inviting him to borrow money, with a view to financial gain, contrary to section 50(1)(a) of the Consumer Credit Act 1974.

A minor, aged nine, had had a savings account with the building society. With his annual statement he had received a mailshot which purported to offer up to £7,500 by way of an unsecured personal loan.

The justices had found that it was the building society's policy not to grant loans to persons under the age of 18, that its computer programme was written so as to prevent loans being granted to minors and that there were, at the bottom of one of the leaflet's 12 pages, the words "loans are not available to applicants under 18 years of age". However, the justices had concluded that the building society was guilty of the offence because the leaflet had been sent to account holders regardless of their age and every invitation to borrow money had been, subject to company policy, with a view to financial gain.

In the judgement of the Court, the document had to be read as a whole, including the words "loans are not available to applicants under 18 years of age". When the document was so read it had to be construed as one whose operation was excluded to those under 18. The prosecution therefore fell at the first hurdle; the document was not an invitation to a minor, let alone to borrow money. Further the prosecution also failed at the second hurdle proving that the document was sent "with a view to financial gain".

The prosecution had argued that the building society had indiscriminately circulated all account holders and therefore the court should infer that it was the company's intention, where possible, to obtain applications whether from persons under or over 18, and therefore to obtain financial gain.

However, the fact that indiscriminate mail-shots of that kind were to be condemned did not mean that the building society was in breach of the 1974 Act.

Structures had existed which sought to eliminate minors from being granted loans, therefore it seemed that the only logical inference was that when the building society had sent the brochure out it was not its intention to obtain financial gain from any person who received it who was a minor.