Teasdale v HSBC Bank Plc [2010] EWHC 612 (QB) (23 March 2010)

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

Neutral Citation Number: [2010] EWHC 612 (QB) Case No. 9SF01225 IN THE HIGH COURT OF JUSTICE QUEEN-�S BENCH DIVISION MANCHESTER DISTRICT REGISTRY MERCANTILE COURT Date: 23 March 2010 Before: HIS HONOUR JUDGE WAKSMAN QC (sitting as a Judge of the High Court) BETWEEN: Case No. 9SF01225 ANTON TEASDALE Claimant and HSBC BANK PLC Defendant AND BETWEEN: Case Number 9MA06132 ERICA BROOKES Claimant and HSBC BANK PLC Defendant AND BETWEEN: Case Number 9MA08165 GERARD JEMITUS Claimant and BANK OF SCOTLAND PLC Defendant 1 AND BETWEEN: Case Number 9MA02780 BRIAN BACKWELL Claimant and THE ROYAL BANK OF SCOTLAND PLC Defendant AND BETWEEN: Case Number 9MA07104 ANDREW MILLS Claimant and MARKS AND SPENCER FINANCIAL SERVICES PLC Defendant AND BETWEEN: Case Number 9MA08427 HELEN CUTHBERTSON Claimant and TESCO PERSONAL FINANCE PLC Defendant AND BETWEEN: Case Number 9MA11185 ROBERT ATKINSON Claimant and BANK OF SCOTLAND PLC Defendant David Uff and James Malam (instructed by BPS Solicitors) for Anton Teasdale and Brian Backwell David Uff and James Malam (instructed by MSB Solicitors) for Erica Brookes and Gerard Jemitus Andrew Mills, Helen Cuthbertson and Robert Atkinson did not appear and were not represented Sonia Tolaney and Richard Hanke (instructed by Addleshaw Goddard LLP Solicitors) for HSBC Bank Plc and Marks and Spencer Financial Services Plc Julia Smith (instructed by DLA Piper (UK) LLP Solicitors) for The Royal Bank of Scotland Plc Fred Philpott (instructed by SCM Solicitors) for Bank of Scotland Plc James Ross (instructed by Cobbetts LLP, Solicitors) for Tesco Personal Finance Plc Hearing dates: 8 and 9 March 2010 Approved Judgment I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. 2 INTRODUCTION 1. On 23 December 2009 I handed down a lengthy judgment in Carey v HSBC [2009] EWHC 3417 which dealt with various issues arising in a very large number of County Court cases in relation to s78 of the Consumer Credit Act 1974 (-�the 1974 Act-�). Following the decision in Carey (and in some instances before) many Claimants in such cases sought to discontinue their claims but on the basis that the Defendant banks should pay all or part of their costs. On 8 and 9 March 2010 I heard such applications in the 7 cases set out above. While recognising that costs are in the discretion of the judge dealing with any given application it was thought sensible by all those who had been party to Carey and those with similar cases pending, that some useful guidance might be given by a detailed ruling by me on costs in some chosen cases. The cases which I heard were selected by agreement of the parties at and following a CMC which took place on 2 February 2010. THE LAW 2. CPR 38.6 (1) provides as follows: -�Unless the Court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant.-� 3. It is also relevant in my view to refer to CPR 44.3 (4) which provides that: -�In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including -� (a) the conduct of all the parties-� (c) any admissible offer to settle made by a party which is drawn to the court-�s attention.-� 4. Sub-paragraph (b), dealing with whether a party has succeeded on part of his case, is not relevant here since by discontinuing the Claimant has disabled the Court from deciding whether it had succeeded or not. 5. In the course of submissions from both sides I have been referred to the following authorities: In re Walker Wingsail Systems Plc [2006] 1 WLR 2194, Official Receiver v Doshi [2007] BPIR 1135, RBG Resources plc v Rastogi [2005] EWHC 994 (Ch), Maini v Maini [2009] EWHC 3036 (Ch), RTZ Pension Property Trust v ARC Property Developments [1999] 1 All ER 532 and Far Out Productions v Unilever [2009] EWHC 3484. 6. I set out in particular the following extracts from the judgment of Chadwick LJ in Walker: -�12 In the following ten paragraphs-paras 9-18 of his witness statement-the liquidator explained why he continued to take the view that the claims against Mr Walker and the estate of the late Mrs Walker remain well founded. That is, of course, wholly and hotly disputed by Mr Walker. But it is no part of the function of a court on an application to discontinue to attempt to reach a decision whether or not the claim would succeed. I am content, as the judge was, to assume that the liquidator has a serious claim deserving of argument at the trial. This is not a claim which could be dealt with on a summary basis; and it is not a claim that could be struck out as having no real prospect of success.... 24.....The form in which that rule [CPR38.6] is expressed-which differs from the earlier rule, Ord 21, r 3 in the Rules of the Supreme Court 1965-makes it clear that the normal order on discontinuance is 3 that the claimant bears the defendant's costs up to the date on which notice of discontinuance is served. The rule makes it clear that a court may order otherwise; but the burden is on the party who seeks to persuade the court that some other consequence should follow; and the task of the court is to consider whether there is some good reason to depart from the normal order..... 36 It is clear that the test formulated as "one just has to look at the state of the action as it is and see what the fair and just thing to do is at the moment in time" influenced the judge in this case. For my part, I doubt whether the test is as simple as that under CPR r 38.6. Plainly, under the new rule, the court has to be persuaded that it is just to depart from the normal consequences of discontinuance. The rule recognises that justice will normally lead to the conclusion that a defendant who defends himself at substantial expense against a plaintiff who changes his mind in the middle of the action for no good reason-other than that he has re-evaluated the factors that have remained unchanged-should be compensated for his costs.-� 7. In my judgment the following principles may be derived from those cases: (1) When a party discontinues, there is a presumption by reason of CPR38.6 that the Defendant will get his costs. The burden is firmly upon the Claimant to show that there is good reason to disapply it; see the judgment of Chadwick LJ in Walker at paras. 24 and 36. See also the judgments of Lightman J in RBG at para. 48 and Proudman J in Maini at para. 11; (2) The fact that the Claimant would have, or might well have succeeded at trial (a point sometimes advanced by a discontinuing Claimant) is not itself a good reason. This is because the Claimant has, by discontinuing, chosen not to have a trial by which the claim could be determined. Once there is to be no trial, it is not the function of the Court to attempt to decide whether or not the claim would have succeeded. See Walker paragraph 12; (3) I would only add this: if it is plain to the Court that the claim would have failed at trial that must be a relevant factor against disapplying the presumption because it suggests that all that discontinuance has done is to bring forward the day of defeat; see the judgment of Nicholas Strauss QC in Far Out at para. 9. See also the final sentence of para. 12 of the judgment in Walker which shows that it could be relevant that the claim could have been struck out as having no real prospect of success; (4) The mere fact that the Claimant-�s decision to discontinue may have been motivated by practical, pragmatic or financial reasons as opposed to a lack of confidence in the merits of the case will not, without more, assist. This is because the Claimant has taken the risk of litigation by commencing it and exposing the Defendant to the costs involved in defending it. See Maini at para. 11 and Far Out at para. 3. Thus a simple re-evaluation of the commercial point in proceedings, as with a re-evaluation of the merits, is not enough. See paragraph 11 of Maini; (5) In most cases, in order to show good reason, the Claimant will need first to show a change of circumstances since the claim was made. This will demonstrate at least that there is something more than a simple re-evaluation. See Far Out at para. 3. But even if circumstances have changed since the commencement of the claim, if they result from the very fact of the claim, for example the Defendant has run out of money because he has spent it all on defending it, the Claimant cannot invoke that. It may be different where the Defendant has rendered the Claimant-�s claim worthless because of something he has done on his own initiative, for example embarking on some other unsuccessful proceedings which led to his own bankruptcy. See Walker 4 para. 39 commenting upon the decision in Everton v World Professional Billiards and Snooker Association 13 December 2001. Equally, if the chances of success had reduced in the Claimant-�s eyes because of what the Defendant produces on disclosure or because of some argument raised in the Defence it would be very unlikely that this would assist the Claimant on costs if he then discontinues. That is because such changing -�circumstances-� are part and parcel of litigation; (6) In truth it is difficult to see how any change of circumstance could amount to good reason unless it is connected with some conduct on the part of the Defendant which deserves to sound in costs against him. Thus paragraph 11 of Maini refers to -�active misconduct-�. And at p541 of RTZ Potter LJ refers by way of example to the case of a Defendant -�who perversely encourages a plaintiff into action by concealing the existence of a defence although reasonably invited prior to proceedings to make disclosure.-� Another example is the unnecessarily aggressive approach and totally unreasonable and unjustified stance taken by the Defendant in relation to negotiations before discontinuance, as found by Lightman J in para. 53 of RBG. Or the failings by the Defendant accountant in his professional obligations to the liquidator in Doshi; it is to be noted that in the last two cases the result was a percentage reduction in the Defendant-�s recoverable costs, not an order that they pay any part of the Claimant-�s; (7) And even if there has been some conduct by a Defendant which has caused a change of circumstances this should not have an adverse impact against him if, having regard to all the circumstances it does not amount to a good reason to disapply the presumption; so a change of circumstances is simply the beginning of the enquiry, not the end of it; (8) Thus the context for the Court-�s mandatory consideration of all the circumstances under CPR 44.3 is the determination of whether there is a good reason to depart from the presumption imposed by CPR 38.6. 8. It follows from the above that I reject the approach advocated by Mr Uff at paragraph 19 of his Skeleton Argument which is that the Court should -�take an overview of the case as a whole and reach a conclusion based on two questions: (i) who has succeeded in the action and (ii) what order for costs does justice require?-� That approach, set out in BCCI v Ali (No. 3) (1999) 149 NLJ 1734, is cited in the White Book p1174 in the very different context of CPR 44.3 (2) where there has been a trial and by reference to the general rule that the unsuccessful party should pay the costs but the Court may make a different order. 9. I now consider each of the cases before me in turn. THE SEVEN CASES 10. When reading this judgment it will be necessary to have to hand my judgment in Carey since all of the cases here involve issues substantively dealt with there. In each, it is necessary, in order to apply the principles referred to above, to examine with some care, the chronology and content of the proceedings, what the case was really -�about-� from the Claimant-�s point of view and what lay behind the decision to discontinue. 5 Teasdale 11. On 11 August 2008, Credit Issues Limited, a claims management company, wrote to HSBC requiring documents under s78 and under the Data Protection Act 1998 (-�the 1998 Act-�). Under the former, they sought -�the copy of the executed agreement-� as well as the varied terms. On 2 September 2008, HSBC responded saying that it could not at that stage locate a copy of the original agreement, being a clear reference to the entirety of the document actually signed by Mr Teasdale. But it did enclose what it called a generic signature box but which was in fact an entire blank application form together with the terms and conditions applying at the time of the making of the agreement, and a copy of the most recent terms. See A/1/2.8-2.41. The effect of my judgment in Carey was that this complied with s78 save for the omission of Mr Teasdale-�s name and address. 12. Nothing further happened until 20 January 2009 when BPS Law, solicitors for Mr Teasdale wrote to say that there was still no compliance but they did not say in what respect. A generic claim form was enclosed which had not yet been particularised for that case. So it would have included allegations of breach of s78 not in fact relevant. Neither side in Teasdale has produced the actual document sent at that stage. Although it probably included an allegation that the name and address was omitted I do not think that this document should be treated as having put HSBC on any particular kind of notice. At this stage very many such claims were being intimated by many solicitors, including BPS, against many banks. When a situation arose whereby a bank sent back documents in purported compliance with s78 but the Claimant-�s representatives disagreed, it behoved them to say precisely why, so that the bank could deal with the matter efficiently and proportionately. The letter of 20 January also said that if the bank did not make -�satisfactory settlement proposals-� within 21 days proceedings would be issued. It is not clear what BPS was expecting but it was obviously something more than merely an acknowledgment that HSBC could not enforce under s78 (6) (itself a somewhat attenuated benefit for the card-holder as a result of the decision in McGuffick v RBS [2010] 1 All ER 634). Then, on 9 February 2009 a draft of the Particulars of Claim to be issued in this case was supplied. At the same time -�satisfactory settlement proposals-� were sought by 13 February in default of which proceedings were issued. There was no response from HSBC in the meantime and proceedings were issued on 18 February 2009. 13. The claim here, drafted by Mr Uff, is limited to a complaint of a s78 breach and associated relief. Paragraph 8 (1) said that what had been provided by HSBC was not a -�true copy-� of the executed agreement. As Mr Uff accepted in argument, this was a platform for the major point advanced by him on behalf of Claimants like Mr Teasdale, that a reconstituted copy of the executed agreement was not sufficient for the purposes of s78. This formed Issue 1 (a) in Carey. I decided that issue against Mr Uff. In short, a reconstituted copy would do. See paragraphs 46-54 of Carey. 14. Paragraph 8 (3) made the specific point that the name and address was omitted and this was a breach of s78. The need or otherwise for a name and address formed Issue 1 (c) in Carey. I decided, in Mr Uff-�s favour, that the name and address was needed. However I rejected his contention that the source of the name and address had to be the original signed agreement itself, as opposed to some other record of the bank. See paragraphs 58-62 of Carey. 6 15. HSBC responded to the Particulars of Claim in the form of a witness statement (-�WS-�) from Sharon Mattu of HSBC dated 10 March 2009. It included further terms as varied but also a blank application form now including the name and address. According to my rulings in Carey this meant that the bank had now complied with s78. 16. However the claim was not discontinued then. It was listed, with others, for a CMC before HHJ Holman on 22 July 2009 and was then listed for a CMC before me on 8 October 2009. It was not selected as one of the cases to be heard by me in the week commencing 30 November 2009 and was accordingly stayed pending the outcome of what was to become Carey. Following that decision and on 21 January 2010, HSBC took the initiative and wrote to BPS stating that in the light of Carey the claim in Teasdale stood no chance of success and should be withdrawn. If the claim was discontinued then, HSBC would agree no order as to costs. If not, it would apply to strike it out. BPS responded by saying that -�Following the decision ...in Carey...and upon review of the documents...-� their client intended to discontinue and apply for his costs up to the date of the provision by the bank of the name and address. HSBC was invited to consent to that but declined. Following some further correspondence, Mr Teasdale issued an application to discontinue on 29 January 2010 in which he claimed all the costs of the action. Before me Mr Uff was not so ambitious and he sought instead Mr Teasdale-�s costs to 10 March 2009 and that there be no order for the period thereafter. The grounds referred to in the application were essentially that prior to the issue of proceedings HSBC had not complied with its s78 obligation and did not do so until 10 March 2009. 17. In argument, Mr Uff-�s essential points were that (a) Mr Teasdale had a legitimate interest in making his claim (b) although it had to discontinue after 10 March 2009 because the s78 claim was going to fail, that situation was brought about by HSBC-�s failure to provide the correct documents at an early stage, before proceedings were issued and if it had, the proceedings would not have been necessary, and (c) the Court should exercise its discretion and find that in substance Mr Teasdale had in fact been successful because what he wanted was compliance with s78 and eventually he got it. These points were attractively put and had a deceptive simplicity about them - but they are wrong for the reasons given below. 18. First and foremost, this claim was not simply a dispute about the need for the name and address to be provided. Had it been, it would have no doubt been discontinued shortly after 10 March 2009. One of the reasons why there was more to it than that was the Issue 1 (a) point being taken in paragraph 8 (1). Indeed Teasdale could well have been selected as a preliminary issue case on that point although in the event it was not. Mr Uff says that paragraph 8 (1) could have been maintained simply as an umbrella for the Issue 1 (c) point specifically alleged in paragraph 8 (3). Perhaps it could but that was not why it was there. Not only was the Issue 1 (a) point live in Teasdale after 10 March but so was Mr Uff-�s particular take on what was required of the source of the name and address. The reason why no discontinuance occurred until after Carey was because that is when it was made clear that these other points being taken in Teasdale would fail. That analysis is supported by the fact that BPS-�s first letter on the point expressly made reference to -�following the decision ..in Carey..-� 19. So although there was a change in circumstances brought about by HSBC after issue of proceedings -� supply of name and address -� it does not amount to a good reason to rebut the 7 presumption under CPR 38.6. The action would have -� and did -� continue anyway and after Carey, was destined to fail. 20. As to Mr Uff-�s point about legitimate interest, he contended that Mr Teasdale had a proper interest in bringing these proceedings so that he could see whether s78 was complied with. But this does not assist him here because: (1) The mere fact that a party has a legitimate interest in bringing his claim is not relevant to what happens to costs on discontinuance. Most parties do have such an interest but they still take the risk if they bring the claim to a premature end; (2) Moreover, it is far from clear to me that Mr Teasdale did have a legitimate interest in the sense of a proper case for a declaration as to breach of s78 because he did not advance (whether in the Particulars of Claim or in evidence at the time or for the purpose of this application) any details as to why there would be real utility in him having such a declaration -� see paragraph 170 of Carey in relation to Issue 3. I do not accept Mr Uff-�s submission that the Court is simply not entitled to enquire why a particular Claimant seeks this relief and must assume a proper case for such relief without more. That is in conflict with paragraph 170 of Carey. Nor is it to the point that some Claimants-� cases were put forward for the hearing in Carey for the purpose of the preliminary issues. In those cases it was agreed on both sides that they would form the context for deciding some issues of law, but it hardly follows from this that every Claimant (including Mr Teasdale) must be viewed as having a particular interest in knowing what the limits of s78 are. And it is not suggested that this was the case for Mr Teasdale anyway. 1 21. Nor do I accept Mr Uff-�s argument that in truth Mr Teasdale succeeded in his claim just because HSBC produced the name and address. First, that ignores the fact that Mr Teasdale was also alleging that the name and address had to be in a particular form and that there could not be a reconstituted copy. The claim would have failed on those points not because of what HSBC supplied in March 2009 but because of the decision in Carey and the reconstituted copy itself had been provided before proceedings started. Second, the claim was not for an order that a s78 copy be produced. It was for a declaration that there was a breach of s78. On this it was bound to fail. The fact that the upshot was that a s78 copy was made complete after the claim started does not in my view change the nature of what was sought. Mr Uff argued that since the only remedy open to a card-holder who seeks a copy of a card is non-enforcement under s78 (6) if it is not produced, he has no choice but to litigate on that basis in order to obtain a s78 copy. But that seems to me to ignore the fact that the sanction expressly provided by statute for non-compliance is the negative one under s78 (6). After all, if the bank states that it cannot comply, that is the end of the matter under s78 save for the operation of s78 (6). (As noted in paragraph 231 of Carey the question of whether injunctive relief may be granted is an open one, but Mr Uff-�s argument here proceeds on the basis that such relief is not available and of course it was not sought in Teasdale). 1 Mr Uff placed reliance upon paragraph 169 of my judgment in Carey but this simply said that a debtor -�might well-� have a legitimate interest in having the question decided -� as one of a number of reasons given why it was unwise to be prescriptive either way on what were matters of discretion. The approach to be taken in any particular case is that set out in paragraph 170. 8 22. Finally, HSBC-�s conduct cannot be examined in a vacuum. First, the -�agenda-� for the claim seems to have been wider than merely the declaration actually sought given that BPS were seeking some form of settlement other than a simple acknowledgment of a failure to comply with s78. On any view HSBC were acting reasonably in my view in resisting the call for such proposals. If this made the issue of proceedings (and the cost thereof) inevitable it can hardly be laid at HSBC-�s door. Second, it has to be borne in mind that banks like HSBC had very many such claims to deal with and this may well cause delay in producing all the correct documents. See paragraph 21 of the statement of Naomi Simpson dated 2 March 2010. I also adverted to this in paragraph 169 of Carey. One also cannot ignore the question of proportionality here. At best one would be talking about the issue fee and even then discounted to take account of the fact that the arguments in play were not in truth limited to the simple supply of name and address. 23. In respect of the costs for the period after 13 March 2009 Mr Uff contends that there should be no order. There is no logic to that in my view. The alleged change of circumstance had been and gone with no discontinuance and the fact that not much happened thereafter is not a reason for denying HSBC its costs. In fact some costs must have been incurred because the case featured in two subsequent CMCs. 24. In all of those circumstances it is plain that there is no good reason for disapplying the presumption under CPR 38.6 and HSBC should have all of its costs in the usual way. Brookes 25. This is a case which was also pleaded by Mr Uff and brought by MSB Solicitors. The s78 request was made on 13 August 2008 and a copy of the -�original agreement-� was sought. HSBC replied on 2 September enclosing the same collection of documents as they had provided in Teasdale. HSBC clearly thought that it was being asked to provide a copy of the actual signed agreement because it said that it could not presently locate it, but nonetheless the documents supplied complied with s78. On 9 September, MSB then asked HSBC to say when it would be able to locate the original or alternatively to say that it no longer had a copy. On 26 September HSBC repeated that it had complied with s78. MSB wrote again on 17 December not taking any further point under s78 but seeking the original agreement under the 1998 Act. HSBC responded on 23 December saying that it had complied with s78 and was not obliged to produce the original under the 1998 Act. 26. Nothing more happened until 6 March 2009 when MSB sent a copy in draft of the claim form it intended to issue. (There is an issue of fact as to whether this draft was in fact received by HSBC but this is not something which I can resolve on this application and for present purposes I shall assume that it was received.) In the letter MSB also said that -�We require your confirmation by close of business on 23rd March that the agreement in question is unenforceable. We further require that you reduce the balance outstanding to zero and remove any negative data you have submitted to the Credit Reference Agencies [CRAs].-� There was no response by 23 March and on 9 April proceedings were issued, and they were served on 5 June. 27. The Particulars of Claim is in the same form as that served in Teasdale save that there is an additional claim in paragraphs 10 -� 13. It is pleaded that in the alternative to the claim that there was no s78 copy, if the documents provided did constitute such a copy then the 9 agreement was an improperly executed agreement (IEA). This was because the terms of the agreement as varied were not capable of having been signed in the prescribed manner by the parties because they post-date the original agreement and the documents which were capable of being so signed omitted the prescribed terms. Further relief in that regard under s127 (3) and s142 of the 1974 Act was claimed in the Prayer. 28. Then, on 22 June 2009 ie shortly after service, HSBC provided a WS from Ms Mattu which included a reconstituted copy with Ms Brookes-� name and address on it. But the action was not discontinued then and its procedural history thereafter was much as in Teasdale. After Carey, and on 21 January 2010 HSBC wrote to MSB in the same terms as it had written to BPS in Teasdale requesting that the claim be discontinued forthwith. This crossed with a letter from MSB of the same date saying that having reviewed the documents here, there was still no compliance because the varied terms provided by Ms Mattu were in fact those applicable in 2006 and not in August 2008 when the s78 request was made. It enclosed a proposed consent order by which the claim was withdrawn with an admission of non- compliance by HSBC and an order that it pay Ms Brookes-� costs. On 29 January HSBC replied, providing the terms applicable in 2008. It said that HSBC was entitled to comply with s78 at any time and disagreed with MSB-�s proposals for costs. Instead it offered a discontinuance with no order as to costs. This was not accepted and on 9 February an application to discontinue with payment of all of Ms Brookes-� was issued reciting that s78 compliance had now been effected. As with Teasdale Mr Uff modified that claim, seeking Ms Brookes-� costs until 22 June 2009 and then no order after that. He did not seek costs beyond 22 June 2009 because the point about the varied terms not being the latest one was not taken until January 2010. 29. In my judgment the position on costs under CPR 38.6 is essentially the same as in Teasdale and the result should be the same for the following reasons in particular: (1) The fundamental Issue 1 (a) point on the insufficiency of a reconstituted copy was still being taken; there was also the point about the source of the name and address; (2) The letter before action on 6 March sought relief other than a declaration of non- compliance or unenforceability to which Ms Brookes on any view was not entitled. First, there was no basis for the account to be reduced to zero because the absence of a s78 copy does not itself entail an unfair relationship without which the Court does not have power to make such an order. And even if there was an IEA this does not itself give rise to an unfair relationship. See my judgment in Carey on Issues 3 and 6. Second, non-enforcement by reason of s78 (6) does not prevent reporting to CRAs. See McGuffick (supra). Mr Uff agreed that these further claims were simply ambitions on the part of MSB and should be ignored. I disagree. They are highly pertinent to costs because the letter clearly states that without them proceedings would be issued, and it is principally the need for and the costs of proceedings which are at stake here. I am entitled to and do assume that if HSBC had not agreed to those parts of the letter the claim would have been issued; (3) Although there was strictly a further non-compliance not resolved until 2010, it was a point not raised by BPS before then and once raised it was dealt with immediately; (4) The points made in paragraphs 20 and 21 above as to legitimate interest and whether Ms Brookes in truth succeeded apply equally here; 10 (5) The existence of the alternative IEA claim was not said by Mr Uff to support his claim for costs and if anything it counts against him. That is because, since there came a time when a s78 copy was provided, that should have led to the alternative IEA claim. The only -�new-� documents since issue of proceedings were the further version of the varied terms and the name and address. That IEA claim was therefore on the table as it were but in the event it was not proceeded with. And if it had been proceeded with it would have been bound to fail without more since the purpose of a s78 copy was not to -�prove-� the original agreement for the purpose of s61. I make it clear, however, that even without this feature, the claim for costs by Ms Brookes here would fail. Jemitus 30. This is a case which was also pleaded by Mr Uff and brought by MSB Solicitors. The request was made on 26 June 2008. A true copy of the original agreement was sought under s78 along with documents under the 1998 Act. Halifax replied on 15 July and enclosed the documents to be found at 2/13 of the Jemitus bundle. They included a copy of the typed agreement with the name and address on it but only in the varied form. On 19 August MSB sought a copy of -�our client-�s original signed consumer credit agreement/application form-�. There was no response and on 10 February 2009 MSB said that there was still no s78 compliance. On 10 March MSB wrote enclosing a draft of the claim to be issued and seeking by 26 March an acceptance by Halifax that the agreement was not enforceable that the balance would be reduced to zero and removal of any negative history at the CRAs. There was no response by May and on 5 May the claim was issued and then served on about 15 June 2009. 31. The claim was in essentially the same form as Teasdale. However in the section on breach the specific point taken was not the absence of name and address but the fact that only the varied terms were provided and paragraph 8 (1) stated that there was no true copy of the executed agreement. However, in addition to the relief sought in Teasdale there was here in paragraph 10.3 a claim for an injunction to restrain Halifax from taking any step to enforce the agreement and in paragraph 10.4 a claim for an order under s140B requiring Halifax not to report any default to a CRA and to remove any prior negative report. The claim under paragraph 10.3 was not necessary and that made under paragraph 10.4 was misconceived because of my finding on Issue 3 in Carey and the decision in McGuffick. 32. Halifax served its defence on 4 September 2009. It denied any s78 breach and said that all the material terms were either on the front or the reverse of the application form. With it was served a copy of the actual application form and terms (see pp81-82 of the Jemitus bundle) and it was common ground before me that at this point there was s78 compliance. But at the time there were still thought to be issues between the parties because at the CMC on 8 October Jemitus was chosen as one of the cases to be heard in the week commencing 30 November under Preliminary Issues 2 (variation) 3 (s78 and unfair relationships) and 4 (declaratory relief). But then, on 22 October MSB said that it wished to withdraw the claim but only on the basis that Halifax paid all the costs. Halifax refused. On 13 November, a Notice of Discontinuance was served based on late s78 compliance. Mr Jemitus sought all her costs to date. SCM Solicitors, for Halifax, then wrote on 19 November 2009 objecting to any discontinuance on the basis that if the case was removed from the forthcoming hearing, the Lloyds/HBOS group would not be represented at it, and asking that the discontinuance be withdrawn. It also referred to the fact that SCM was considering applying to set aside the 11 discontinuance (if not withdrawn). A Skelton Argument from Mr Philpott about this was also served on 19 November. MSB refused to withdraw the Notice and after further letters from MSB a telephone hearing was held by me on 24 November attended by Mr Philpott and Mr Malam for Mr Jemitus. The upshot was that a replacement case was found, being Atkinson (see below) and the discontinuance of Jemitus stood. 33. In my judgment, the outcome here should be the same as in Teasdale: (1) In truth the case was about more than simply the issue on variation. The fundamental point on Issue 1 (a) was there as well. While in Carey the banks lost on the variation point (Issue 1 (b)) they succeed on the former point; (2) The real -�agenda-� in Jemitus included the prevention of reporting any default to CRA-�s. That was a claim which could not be made good under s78 (6) as McGuffick has shown; (3) Moreover, and as recognised in the selection of Jemitus as an Issue 3 case, the relief claimed in paragraph 10.4 was premised on the existence of an unfair relationship. As I found in Carey, however, the absence of a s78 copy does not without more give rise to such a relationship so the case would have been lost on that point; (4) Further, the claim for declaratory relief was not supported by any detail as to why it would have real utility for Mr Jemitus in his case. Nor has any detail or evidence been submitted on this application. The additional claims to stop reporting to CRA-�s rather suggest that it did not, absent this further relief. 34. Accordingly Halifax should have its costs up to the date of discontinuance on 13 November. However, I consider that Mr Jemitus should have his costs of the matter from 13 November onwards, including dealing with SCM-�s letter of that date and Mr Philpott-�s Skeleton Argument because I cannot see how a party can be prevented from discontinuing just because the other party has a general interest in the case being litigated as a test case. There were costs for the Lloyds/HBOS group, no doubt, in seeking and finding a replacement case but they cannot be laid at the door of Mr Jemitus. Backwell 35. The claim here was pleaded by Mr Uff and was brought by BPS. Here the request was made by Credit Issues Limited on 7 August 2008. On 22 August RBS responded and enclosed a copy of the front page of the original application form together with an up-to-date version of the prescribed terms and the prescribed information, containing the figures for charges and interest rates that were applicable at the date of the response. On 7 October Credit Issues wrote saying that this was not a copy of the executed agreement under s78 though it did not say specifically why not. It also said that RBS should not make any report to a CRA because this was a -�disputed liability-� although in fact it was not since s78 (6) does not remove the underlying liability -� see McGuffick. Then, on 20 January 2009 BPS produced a generic Particulars of Claim and gave RBS 21 days to make -�satisfactory settlement proposals-�. The generic claim is at pages 70B-G of the Backwell bundle. Paragraph 7 included allegations of a lack of name and address, lack of original terms and illegibility. An alternative IEA claim much as in Brookes was also made. 12 36. On 9 February BPS sent a draft of the claim to be made in that case to RBS saying that satisfactory settlement proposals had to be made by 13 February 2009 or proceedings would be issued. On 17 February the claim form was issued. Paragraph 8 (1) said that there was only the front page of the agreement and varied terms and conditions. On 26 March 2009 RBS wrote to say that it could not locate the agreement but it nonetheless remained valid and payments should be made. On 9 April 2009, DLA Piper, RBS-�s solicitors, wrote acknowledging the inability to comply with s78 and inviting BPS to withdraw the claim on the basis of that acknowledgment as the declaratory relief being sought would serve no purpose. BPS wrote on 14 May to say that it was taking Counsel-�s opinion, and enclosing notice of funding in relation to an insurance policy. On 22 May BPS said that as the admission that the agreement was lost only came after proceedings were started, RBS should pay Mr Backwell-�s costs. But BPS also sought, as part of a proposed consent order, an undertaking by RBS that it would not make any report to a CRA, relief to which Mr Backwell was not in fact entitled. RBS by letter dated 2 June refused to give that undertaking or pay costs and proposed that there be no order as to costs instead. This was not accepted and subsequently, on 19 June, BPS pressed on with the claim, enclosing draft amended Particulars of Claim. DLA consented to the amendments on 16 July. A new paragraph 13 alleged that RBS threatened to report Mr Backwell to CRAs notwithstanding that the agreement was not enforceable due to RBS-�s failure to comply with s78. Paragraph 14 then alleged that any such report would make the relationship between the parties unfair. There was in fact no basis for either of those claims. On 16 July DLA also asked if Mr Backwell still had a copy of his original agreement. BPS said that as far as it was aware he did not but it took instructions and reverted on 14 August to say that he did not. 37. Backwell was listed as an Issue 4 case at the CMC on 8 October 2009, and was dealt with at the hearing commencing on 30 November. On 7 January I ordered that Mr Backwell should pay RBS-�s costs in relation to Issue 4 (a). Then, on 29 January BPS issued an application to discontinue and recover all of Mr Backwell-�s costs from RBS. The application said that -�Following the decision.. in Carey-�and the -�admission..the claimant is satisfied that the agreement is unenforceable..-�, claiming that he discontinued because of RBS-�s admission of 26 March 2009. As with Teasdale and Brookes Mr Malam has in fact limited the costs sought to be paid by RBS to those incurred up to that date. 38. The fact is, however that the claim was not discontinued then but was kept going, with amendments and for the purpose of a preliminary issue which went against it. Again, I would decline to disapply the presumption, for the following reasons: (1) The claim here was doing more than simply seeking an admission; what Mr Backwell wanted was an embargo on reporting to the CRAs as is clear from the BPS letters of 7 October 2008, 22 May 2009 and the amendments; this was relief to which he was not entitled; if a simple admission had been all that Mr Backwell had wanted he would no doubt have discontinued shortly after 26 March, without more. As against this, Mr Malam argued that in truth Mr Backwell intended to discontinue in any event after 26 March 2009 and up to then the further relief had not been claimed. But if so, one has to ask why he did not discontinue then and why the further relief, foreshadowed in the letter of 22 May 2009, was added to the Particulars of Claim; (2) In fact Mr Backwell did not succeed in his objective to prevent reporting to CRAs and could not have done so; 13 (3) Further, and as with Jemitus the claim for declaratory relief was not supported by any detail as to why it would have real utility for Mr Jemitus in his case. Nor has any detail or evidence been submitted on this application. The additional claims to stop reporting to CRAs rather suggest that it did not, absent this further relief. (4) Even the application to discontinue suggests that it was in part based upon the decision in Carey; (5) Even if RBS had made the admission before issue of proceedings, the letter of 13 February 2009 suggests that they would have gone ahead absent -�satisfactory settlement proposals-�. Mills, Cuthbertson and Atkinson - Introduction 39. It will be noted that the Claimants in Mills, Cuthbertson and Atkinson are described above as not having appeared and not being represented. This is because although Mr Burley of Consumer Credit Litigation Solicitors (-�CCLS-�) attended on Monday 8 March to deal with a quite separate matter concerned with a costs application against his firm, he was not in a position to make submissions on behalf of these three Claimants, represented by his firm, whose cases had been earlier selected. Nor had representation been arranged. He made an initial application to adjourn those applications on Monday afternoon but I was not in a position to deal with it until the following day. I was later informed that he was seeking in the course of Monday to arrange some representation for the following day, it being accepted that the applications would not be reached until then anyway. In the event he did not appear on Tuesday and instead Ms Carson appeared from CCLS. She unfortunately had no proper instructions and could not assist the Court save to ask for an adjournment. I declined it for reasons given at the time in a short ruling. Although I had no submissions from the three CCLS Claimants on the costs issues relating to their discontinuance I did have extensive submissions from Mr Uff who dealt not only with the facts of the cases involving him but also the relevant principles to be applied when considering the question of discontinuance and costs in this context. I doubt whether they could have been improved upon from a Claimant-�s point of view. And as to what actually happened in each of the CCLS cases this was clear from the bundles of documents which had been supplied prior to the hearing. 40. Nonetheless, as the CCLS Claimants did not appear and were not represented they have the usual right under CPR23.11 to have their applications relisted so that they can seek to set aside or vary my order as it affects them. The relevant banks have also agreed that they will not enforce any adverse costs order against any of these particular Claimants (as opposed to CCR or any other additional party made liable for them), without leave of the Court. This will therefore hold the position as far as the individual Claimants are concerned pending any application under CPR23.11. I should also add that the relevant claims management company, Cartel Client Review Limited (-�CCR-�) has agreed to be bound jointly and severally with these particular Claimants in any event insofar as any adverse costs order is made against those Claimants. Mills 41. In this case, CCR made a request to Marks and Spencer Financial Services Plc (-�M & S-�) dated 5 September 2008 for a s78 copy. According to CCR, M & S responded on 24 September providing what it said was a conforming copy of the agreement. M & S have no 14 record of such a response but for these purposes I accept Mr Mill-�s position (as set out in the Particulars of Claim later issued) that they did and that what was supplied conformed to s78. Indeed paragraph 3 of the Defence admits paragraph 5 of the Particulars of Claim which pleads the sending of the letter of 24 September. Furthermore, documents relating to Mr Mills-� agreement (including the front of the application form) had been exhibited to the Particulars of Claim so they must have been obtained somehow. 42. M & S says that the next it heard was the service of the Particulars of Claim, issued on 7 April 2009. A witness statement dated 1 December 2009 from Mr Kelly, a trainee solicitor with CCLS, says that a letter of claim was sent to M & S on 23 February 2009 setting out how it was said that there was an IEA. He then says that M & S responded on 18 March 2009 saying that the copy agreement was believed to be legally enforceable. M & S has no record of this further exchange and Mr Kelly did not exhibit it. For present purposes I can derive nothing useful from the fact of any exchange as I have not seen it. 43. While the Particulars of Claim accepted that there had been compliance with s78, paragraph 6 alleged that there was an IEA because the agreement failed to include all the prescribed terms and paragraph 7 alleged that it was thereby irredeemably unenforceable. Paragraph 9 pleaded that as a result there was an unfair relationship. Paragraph 10 sought relief pursuant to s140B of the 1974 Act including rewriting the balance to zero and repayment of all sums paid thus far by Mr Mills to M & S. 44. In the defence dated 30 April 2009 all of those claims were denied. The documents supplied with the Defence included the front of the application form and what appears to be its reverse embodying the prescribed terms. On the face of it these documents showed a s61 compliant agreement. 45. However the case was pursued and on 8 October 2009 I ordered it to be heard on Preliminary Issues 4 (declaratory relief) 5 (how prescribed terms are to be -�contained-� in the agreement) and 6 (whether an IEA entails an unfair relationship). Then, on 16 November, CCLS made a request for further information under part 18, asking whether the document (this must mean the document containing the prescribed terms) was within Issue 5 (a) -� (c) ie on a sheet referred to on the piece of paper signed by the debtor, or attached to it, or supplied with it. In response Addleshaw Goddard said that the s61 prescribed terms were on the reverse of the application form and s62 terms and conditions were on a separate sheet. 46. Then, by an application dated 1 December 2009, Mr Mills sought his costs -�upon the Claimant discontinuing-� by reason of the disclosure of documents on 23 November. For present purposes I treat this application as a Notice of Discontinuance, seeking costs. It was accompanied by the WS of Mr Kelly of the same date. Mr Kelly makes no reference to the Defence, or the documents supplied with it. He contends however that the facts of M & S-�s case have substantially and materially changed from that which was previously understood from its pleading and previously disclosed documents and there had been no prior indication of such documents and Mr Mills did not know that they existed. 47. Ms Tolaney responds to that suggestion by saying that in truth all that happened on 23 November is that in a voluntary disclosure exercise M & S explained that the prescribed terms which it had always said were there, were in fact on the reverse of the application 15 form. It is to be noted that the Particulars of Claim never actually spelled out why, according to Mr Mills, the agreement had not contained such terms and M & S of course contended in its Defence that it did. What has happened here is that further down the line both parties considered the issue of how it did and M & S produced an answer that was incontrovertible. The only -�revelation-� here appears to me to be the fact that the prescribed terms were on the reverse of the form supplied. In my judgment this is nothing more than the normal course of litigation. Discussion of this issue was brought forward because Mills was due to feature in the hearing on 30 November but that cannot make any difference. Evidence adduced which shows that the claim will fail is not in my judgment a -�change of circumstance-� or if it is, it does not provide a good reason to disapply the presumption here. 48. Furthermore, the real agenda in this case, or a substantial part of it, in my judgment, was the relief claimed in paragraph 10. This could never have succeeded because even if there was an IEA that would not of itself lead to an unfair relationship -� see Issue 6 in Carey. 49. Accordingly, M & S should have its costs of the discontinued action in the usual way. Cutherbertson 50. On 28 August 2008, CCR made a s78 request on behalf of Mrs Cuthbertson. On 23 September, Tesco Personal Finance (-�Tesco-�) supplied what it said were documents in compliance with s78 including a copy of the front of the signed application form. 51. Proceedings were then issued on 6 May 2009. Paragraph 5 accepts that a s78 copy was indeed provided on 23 September. However paragraph 6 alleges that there was an IEA because the agreement did not contain the prescribed terms and the reason appears to be that set out in paragraph 8 namely the prescribed terms were to be found only in a separate terms and conditions document. It was then claimed that the agreement was irredeemably unenforceable, that the IEA gave rise to an unfair relationship that there should be relief under s140B of the 1974 Act like that claimed in Mills. The simple point made in the Defence dated 6 July was that the original terms and condition were attached to the agreement, and were thus contained in it. Allocation questionnaires were filed by both sides and on 8 October the case was listed for the hearing on 30 November under Issues 5 and 6. Then, on 20 November Tesco issued an application to strike out or obtain summary judgment dismissing the claim. It contained detailed evidence as to precisely how the signed agreement would have looked at the time including the fact that the prescribed terms or information would have been on the reverse of the application form. What that evidence demonstrated was that there was simply no IEA case. On 27 November CCLS intimated that the claim would be discontinued but Mrs Cuthbertson would be seeking her costs. A consent order was drawn up removing the case from the hearing on 30 November and seeking a costs hearing at a later date. It was so removed although a signed consent order was not sent to the Court. Assuming (as I do) that this document is to be treated a Notice of Discontinuance, it then became subject to my orders of 2 and 16 February 2010. It was one of the cases nominated to be heard by me. No grounds for a different costs order under CPR 38.6 were provided by 16 February 2010 pursuant to paragraph 4 (b). I would not hold that particular date against CCLS simply because the orders were not drawn up until 1 March although Mrs Cutherbertson was represented at the hearing on 2 February and her case was included in the list with the agreement of CCLS. But the fact remains that no grounds have 16 been adduced at any stage. However, I am not going to treat the application for costs as struck out on that account. Instead, as with the others, I deal with it under CPR 38.6. 52. It is in fact difficult to discern the grounds on which it could be said that the presumption should be disapplied. It might be said that the full evidence showing that Mrs Cuthbertson had no case on the facts was only served on 20 November but that in my judgment falls to be considered as part and parcel of the litigation. And in fact Tesco had denied in the Defence that the prescribed terms were in some separate document, albeit that it said there that they were -�attached-�. Nor is there any evidence that Mrs Cuthbertson articulated precisely her s61 complaint before proceedings began. 53. Moreover the point about the claim-�s real agenda, made in paragraph 48 above, applies with equal force here. 54. In those circumstances I can see no basis on which it can be said that there is good reason to disapply the presumption. Atkinson 55. On 3 June 2008, CCR requested a copy of the -�signed credit card agreement-�, application form and other documents from Halifax. It was sought under the 1998 Act and under s78 if the agreement was regulated. On 25 June 2008 Halifax replied enclosing what it said was a copy of the credit card agreement and terms and conditions. A further s78 letter was sent on 19 December 2008, in general terms to which there appears to have been no response. On 25 May 2009 the claim was issued. It alleged in paragraph 7 that there was no s78 copy because the form of agreement was of a kind which could only have been drafted after 31 May 2005, or in 2006, whereas the original agreement was entered into before September 2000. There is nothing to suggest that this particular point was made to Halifax prior to the issue of proceedings. 56. Paragraph 10 is in the same terms as paragraph 9 of the Particulars of Claim in Adris, set out in paragraph 187 of Carey. Paragraph 11 then alleges that the breach of s78 gave rise to an unfair relationship. Paragraph 13 says that the late payment charges were in breach of a decision of the OFT. Paragraph 14 then seeks s140B relief, in particular that the Defendant should comply with the s78 request in 28 days failing which the balance should be reduced to zero and all payments made be returned, an account of all excess payments made and a declaration that the agreement is irredeemably unenforceable. 57. A Defence was served on 3 July 2009 putting Mr Atkinson to proof that there was no s78 copy but in any event firmly denying any s61 breach. In particular paragraph 5.8 alleged that all the prescribed terms were on the reverse of the application form. 58. The case went forward to the CMCs on 22 July and 8 October but was not selected originally for the hearing on 30 November. However on 24 November it was substituted for Jemitus and it would have featured as an Issue 5 case. 59. In the course of the hearing which commenced on 30 November, Mr Philpott sought to explain by way of example how the original agreement would have looked and this led to a 17 total of three WSs from Mr Scott Greenwood, a solicitor at HBOS, dated 2 and 3 December 2009. They demonstrated that there was nothing in Mrs Cuthbertson-�s s61 claim. On Friday 4 December Mr Say, then Counsel for Mr Atkinson, sought to withdraw or discontinue the claim subject to costs and I allowed that application. No grounds in support of the application for costs have been adduced but I do not dismiss it on those grounds. 60. I can see no basis for disapplying the presumption here for the following reasons: (1) While it could be argued that Halifax should have provided the documents supplied in December, at an earlier stage, there was no specific indication to Halifax before proceedings began as to why the documents given on 25 June did not comply with s78; (2) Moreover the real thrust of the Particulars of Claim was the s61 claim. This was denied at the time and all that happened in December was that Halifax demonstrated ahead of disclosure that there was nothing in it; this, again, is simply part and parcel of the litigation; (3) There are also aspects of the Particulars of Claim which were clearly unfounded in any event: (a) Paragraph 10 seeks to reverse the burden of proof of a properly executed agreement which I found to be misconceived in the case of Adris, in paragraphs 196-200 of Carey. (b) The unfair relationship claim could not have succeeded either since breach of s78 does not without more, entail it. See Issue 3 in Carey; (c) The claim for the return of late payment charges would not have succeeded because there was no enforceable OFT decision about a £12 maximum, and in any event, by discontinuing, Mr Atkinson abandoned this separate head of claim which had nothing to so with s61. A General Point 61. I have referred above to a number of instances where a particular claim would not have succeeded as a result of the decisions in McGuffick or Carey. The fact that when the claims were made those decisions had not yet been made does not, of course, assist any of the Claimants. As with any Claimant, they take the risk that the legal issues might be determined against them and if so, that is no reason why the other party should pay their costs. That principle applies irrespective of whether the discontinuance occurred before or after those decisions. Basis of Costs ordered against Claimants in the CCLS cases 62. Mr Ross for Tesco and Ms Tolaney for HSBC seek an indemnity costs order in respect of the claims brought by Mr Cuthbertson and Mr Mills in relation to the costs of those discontinued actions. I have also been informed that once I have determined, after a further hearing, whether Mr Wright and/or CCLS should be liable for costs in those cases brought by CCLS (as CCR has already agreed) there will be applications by at least RBS that CCR and any other additional party made liable should pay the costs awarded already (on a standard basis) against the individual Claimants in the cases of Adris, Brownlow and 18 Mandal, but on an indemnity basis. On those applications, such additional parties will no doubt be making representations as to the basis of costs. As similar considerations may arise (and which will affect those additional parties) in Cutherbertson and Mills I do not intend to deal with the basis of costs in those actions within this judgment. I will hear Counsel on how best to deal with this following hand-down of this judgment. CONCLUSION 63. I therefore dismiss the Claimants-� applications for a different costs order under CPR 38.6 in all seven cases. Subject to any further order as to the basis of costs, the relevant Defendants are entitled to their costs of those actions. 19

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Teasdale v HSBC Bank Plc [2010] EWHC 612 (QB) (23 March 2010) URL: http://www.bailii.org/ew/cases/EWHC/QB/2010/612.html Cite as: [2010] EWHC 612 (QB), [2010] 4 All ER 630, [2010] 4 Costs LR 543

England and Wales High Court (Queen's Bench Division) Decisions