PHOENIX RECOVERIES (UK) LTD SARL V DEVENDRA KOTECHA
(2011) CA (Civ Div) 26/1/2011

A creditor had failed to satisfy a debtor's request under the Consumer Credit Act 1974 s.78(1) for a copy of a credit card agreement as it had not, on the evidence, included the original, actual terms and conditions in respect of interest rates then in force. The creditor was, accordingly, not entitled to proceed to enforce the debt under s.78(6).

The consumer appealed against a decision of the judge allowing a claim by the respondent company for amounts due under a credit card agreement. That agreement, which was regulated by the Consumer Credit Act 1974, had been entered into by the consumer and a bank in 1998, and he was then issued with a credit card which he used extensively. The bank subsequently merged with another bank which took over the first bank's credit card business.

In 2007, The consumer made a request under s.78(1) of the Act for a copy of the credit card agreement. The second bank supplied an incomplete version and, following the consumer's further request it sent a copy of what it contended were the terms and conditions incorporated into the agreement. The consumer disputed whether that version of the terms and conditions was correct. The second bank later sent a default notice and issued proceedings against the consumer, alleging that he was in breach of the agreement.

The second bank then assigned the claim to the plaintiff, who was substituted as a party. The consumer, then acting in person, defended the action on the ground that, because the s.78(1) request was not complied with, Phoenix could not enforce the agreement pursuant to s.78(6) of the Act. The judge found, on the balance of probabilities, that the appropriate records had been supplied by Phoenix. She therefore held that Phoenix had satisfied the s.78(1) request and that it was not precluded from enforcing the debt. The consumer contended that there was no credible evidence that the documents set out as evidence by Phoenix were the same as those which had been used in the agreement between him and the first bank. He submitted, inter alia, that a scanned copy of the bank's leaflet inviting him to apply for the credit card clearly set out an annual percentage rate (APR) of 9.9% for balance transfers, reverting to 16.9% after six months, and 18.7% APR for cash withdrawals, whereas by contrast the terms and conditions given in evidence by Phoenix sent out in terms rates of 20.9% APR for balance transfers and 22.8% for cash withdrawals. It was accepted that that point had not been before the judge, although it was discernible from the papers.

It was held that interest rates were a term of central importance in credit card agreements. There was a strong case that the interest charges which would have been specified in the terms and conditions when the first bank and the consumer made the agreement in 1998 were those in the leaflet and not those which appeared in Phoenix's evidence. Under s.78(1), a creditor was required to set out the actual, original terms and conditions of the agreement at the time it was made. In those circumstances, Phoenix had not proved that that obligation was satisfied, and it was therefore not entitled to progress to enforce the debt against the consumer under s.78(6).
Appeal allowed.