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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Jones v Link Financial Ltd [2012] EWHC 2402 (QB) (22 August 2012) URL: http://www.bailii.org/ew/cases/EWHC/QB/2012/2402.html Cite as: [2012] CTLC 54, [2012] EWHC 2402 (QB), [2013] 1 All ER (Comm) 572, [2012] WLR(D) 251, [2012] ECC 23, [2013] 1 WLR 693 |
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OXO67125 |
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
Rolls Building, Fetter Lane London EC4A 1NL |
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B e f o r e :
____________________
Mrs Patricia Jones |
Appellant |
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- and - |
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Link Financial Ltd |
Respondent |
____________________
Mr J Neville (instructed by Kearns & Co) for the Respondent
Hearing dates: 26 July 2012
____________________
Crown Copyright ©
Mr Justice Hamblen :
Introduction
Factual Background
"GE Money may assign, transfer or otherwise dispose of this agreement, and any amounts owed to GE Money under this agreement to any person without the consent of the Customer, but not in such a way as to reduce any of the Customer's rights against GE Money under this agreement or the law. Accordingly, in this agreement references to GE Money or GE Money Consumer Lending Limited and any company mean person(s) who become owners of its business or any of its rights or duties under this agreement."
"Therefore that means that under section 136 of the Law of Property Act 1925 ostensibily the claimants had in their possession a valid assignment of which they had given notice and upon the terms of section 136 of the 1925 Act they thereby acquired, it being effectual in law, the legal right to the debt and the legal right to take all legal remedies for the same. Under section 136 of the 1925 Act accordingly, absent any other restriction, Link Financial Ltd became entitled to pursue by private proceedings as assignee the debt in question and the section refers to "any debt"."
The issues
"189 Definitions
(1) In this Act, unless the context otherwise requires:
…
"creditor" means the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law, and in relation to a prospective consumer credit agreement, includes the prospective creditor."
(1) Only a creditor as defined under the 1974 Act can enforce a regulated consumer credit agreement (Ground 1); and
(2) An assignee is not a creditor as defined in the 1974 Act as only rights and not duties pass by assignment (Ground 2).
Ground 2
"…The first problem with this definition is that, as a matter of contract law, an assignment transfers rights but does not relieve the assignor of his duties to the other contracting party without his consent. Hence the reference to the assignment of "duties" needs further consideration.
…
The rights of a creditor under a credit agreement are frequently assigned to a third party, e.g under a block discounting agreement or securitisation. Does the assignee then become the "creditor" for the purposes of the Act? It is suggested that the answer to this question will vary accordingly to the policy underlying the particular provision of the Act. Where, for example, certain obligations are imposed on the "creditor" towards the debtor, as under ss.77, 78 (duty to give information to the debtor),ss.76,87, 98 (duty to serve enforcement, default and termination notices), s.97 (duty to supply settlement figure), or s.103 (duty to provide termination statement), it is submitted that an equitable assignment, where no notice of the assignment is given to the debtor, would not pass such obligations to the assignee. (And see the OFT's Guidance on sections 77, 78 and 79 of the Consumer Credit Act 1974 (OFT 1272, October 2010), para 2.4, note 5 which states that (in OFT's view, adopting a "purposive" construction) only legal (and not equitable) assignees are "creditors" for the purpose of ss.77, 78 and 79.) As between assignor and assignee the assignment is effective; but vis-à-vis the debtor, the assignment has no effect until the debtor receives notice of the assignment. Moreover, in practical terms, the assignor will continue to collect the payments (albeit as agent of or trustee for the assignee) and will retain the information necessary to comply with those sections. On the other hand, if the assignment is a statutory assignment under s.136 of the Property Act 1925 with notice of the assignment being given to the debtor, there is a strong argument that the assignee would become the "creditor" (whether by virtue of a "slip" in s.189(1) or by necessary intendment). The assignor will cease to have any interest, legal or equitable, in the debt, and only the assignee will be entitled to claim or enforce the debt. The same considerations will also probably apply in the case of an equitable assignment of which notice has been given by the assignee. Although the legal title to the debt still remains in the assignor, the debtor must pay the assignee and the assignee is entitled to enforce payment of and sue for the debt. See the General Note to s.22 where it is submitted than an equitable assignee who has not given notice ( and a, fortiori, the beneficiary under a trust, see below) does not require a licence."
"Although the definition of 'creditor' and 'owner' in the original CCA 1974, s 189(1) did admit some ambiguity, as reworded following the CCA 2006, it now admits of none. As has been seen above, the definition of these terms has deliberately been made wide enough to encompass assignees of regulated agreements.
Unfortunately the opportunity was not taken to remove the infelicity on which the General Editor of this work has been commenting since the Act was passed. Section 189(1) defines 'creditor' as 'the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law …' and defines 'owner' in similar terms. As Professor Goode has pointed out, the general law of assignment does not permit the passing by assignment of 'duties' under an agreement and it is only to a very limited extent that duties pass by operation of law. The reality is, of course, that the CCA 1974, while nodding respectfully to the common law of assignment, is providing special rules for the assignment of regulated agreements. Under the CCA 1974, the assignment of a regulated agreement puts the assignee willy-nilly into precisely the same position as the original creditor or owner – there are no limitations on the obligations transferred with the agreement – once the assignment is completed by notice being given to the debtor or hirer, the assignee becomes the creditor or owner for all purposes."
"It is submitted that Parliament may have intended to extend the meaning of 'creditor' to include persons to whom the creditor's statutory duties have passed, if only to prevent the assignee evading duties imposed upon the creditor under the Act and in order to facilitate assignments."
"The assignee is bound by the arbitration clause in the sense that it cannot assert the assigned right without also accepting the obligation to arbitrate" – see also DVA v Voest Alpine [1997] 2 Lloyd's Rep 279 at p285-6.
Ground 1
"Miscellaneous
141 Jurisdiction and parties
(1) In England and Wales, the county court shall have jurisdiction to hear and determine—
(a) any action by the creditor or owner to enforce a regulated agreement or any security relating to it;
(b) any action to enforce any linked transaction against the debtor or hirer or his relative;
and such an action shall not be brought in any other court.
(2) Where an action or application is brought in the High Court which, by virtue of this Act, ought to have been brought in the county court it shall not be treated as improperly brought, but shall be transferred to the county court.
(3)–(3B) . . .
(4) In Northern Ireland the county court shall have jurisdiction to hear and determine any action or application falling within subsection (1).
(5) Except as may be provided by rules of court, all the parties to a regulated agreement, and any surety, shall be made parties to any proceedings relating to the agreement."
Conclusion