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Cite as: [2012] EWHC 1950 (QB)

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Neutral Citation Number: [2012] EWHC 1950 (QB)
Claim No. 1MA40018 &


Civil Justice Centre
1 Bridge Street West
M60 9DJ
14th June 2012

B e f o r e :

Sitting as a Judge of the High Court


BARNES Claimant
McILQUHAM Claimant


Transcribed from the Official Tape Recording by
Apple Transcription Limited
Suite 104, Kingfisher Business Centre, Burnley Road, Rawtenstall, Lancashire BB4 8ES
Telephone: 0845 604 5642 – Fax: 01706 870838


Counsel for the Claimants: James Strachan
Counsel for the Defendant: Ruth Bala



Crown Copyright ©


  1. The applications before me are to stay two separate actions, to which I will refer simply as the Barnes action and the McIlquham action, which are concerned broadly with what I might describe as alleged payment protection insurance ("PPI") mis-selling on the part of a financial institution (although not a bank) in both cases known as Black Horse Limited ("Black Horse").
  2. The applications are to stay these proceedings pending a decision of the Supreme Court, expected in the spring or possibly the summer of 2013 in another PPI mis-selling case called Harrison v Black Horse, which I decided on appeal from a District Judge and which decision was upheld by the Court of Appeal last year. The Supreme Court gave permission for an appeal to it earlier this year. The position, procedurally, in respect of each of the claims before me is as follows.
  3. In Barnes, the original particulars of claim were issued on 2nd August 2009. We are now at or around version 10 of that statement of case. There was some delay last year as a result of an interlocutory ruling which I made as to which claims within the current version of the particulars of claim were viable and which were not. The solicitors acting for the claimants, Miller Gardner (who act in both of claims before me) sought permission from the Court of Appeal. That application was rejected and the case has recently restarted. Barnes concerns agreements made as long ago as 2002, 2003 and 2004. Disclosure has now been made. Witness statements have not yet been exchanged and it was thought prudent to await my decision today. Black Horse's witness statements are ready for exchange.
  4. The case of McIlquham started in Birmingham on 13th August 2010. Statements of case have been exchanged, although there is now a further proposed amended particulars of claim. That is subject to an extant application for permission to amend but is being met by a cross-application to strike out or, in any event, to resist that amendment. Those applications concern, at least in part, the issues in the Harrison appeal and it has been decided that those applications should await a decision on my part today. There has therefore been no disclosure and no witness statements. It has been urged upon me, in any event, that the two cases be tried together, with Barnes being the lead case.

  6. The background to the application is essentially as follows. Black Horse makes the application as the defendant in both claims. When I decided Harrison in December 2010, I upheld the decision of the District Judge who had dismissed the claim and, in particular, I rejected the claim that the claimants were entitled to relief for breach of statutory duty under the ICOB rules and/or under the unfair relationship provisions in sections 140A and 140B of the Consumer Credit Act 1974, as amended, due to the alleged very high cost, either in absolute or comparative terms, of the PPI premium and/or the size of the commission taken by Black Horse, being some 87 percent of the total cost of the premium.
  7. The claimants sought permission to appeal to the Court of Appeal, which was granted by that Court. Pending that appeal and, perhaps unsurprisingly, there were some applications in other PPI claims brought on behalf of claimants by the same solicitors that those claims ought to be stayed pending the decision of the Court of Appeal and those stays were granted. In the event, the Court of Appeal last year dismissed the appeal in Harrison. In his judgment at one point, Tomlinson LJ noted the narrow ambit of the appeal, although I do not think that too much can be read into that in the sense that it is plain from his decision, as one might expect, that the Court of Appeal looked at matters of principle and law somewhat more widely, both in relation to the ICOB rules and in relation to the unfair relationship provisions on the question of costs and commission. Indeed, on the face of it, Tomlinson LJ put the matter on a somewhat broader basis than I had articulated in my judgment below.
  8. The claims which are based either wholly or in part on the allegedly high costs of PPI premiums and/or undisclosed commission elements within the premiums, form a significant part of very many PPI claims proceeding in county courts up and down the country. That is true in particular of at least eight cases proceeding against Black Horse conducted by Miller Gardner of which the cases before me are two. It is not clear to me whether these two cases would fall under the present compensatory scheme instituted by the FSA and it is not necessary for me to say any more about that. In some, but not all cases presently before the courts, those acting for the claimants have taken the view that the Court of Appeal has effectively shut out arguments based on costs or commission and they have abandoned those points. They remain, however in the two cases before me.

  10. In early 2012, as I indicated, the Supreme Court granted permission to appeal in Harrison. Any judgment from the Supreme Court is, of course, of the greatest importance but there are some additional features here. First, the unfair relationship regime has been the subject of almost no judicial examination at all at Court of Appeal level. Apart from Harrison, itself, and I am told there has been only one other case where the regime was only lightly touched upon. And there has been no consideration at all of the scheme, or any part of it, at Supreme Court level. So, this is a first look by the most senior appellate court at this important part of the 1974 Act. Secondly, it seems to me to be highly likely or at least realistically possible that the Supreme Court will take the opportunity to consider that regime generally, given its lack of opportunity to do so so far. Thirdly, the decision is likely to have a significant impact on the many PPI cases already in train or at least it would do if decided now.
  11. On any view, the Supreme Court will have to deal with arguments about costs and commissions and it is inherently unlikely that they are going to confine themselves in their pronouncements or in reaching a principled decision on the point to only the very particular facts which arose in the case of Harrison, itself. Any decision made is likely, in my judgment, not only to affect whether such cases can still be sensibly pursued or defended but may well affect what facts are truly relevant and what are the truly necessary factual findings for the court to make in the context of the law on unfair relationships as then pronounced by the Supreme Court. It seems to me that where any trial judge is dealing with PPI premiums on the question of costs and commission which, as I have said, is a notable feature of such claims, the notion that the trial judge is unlikely to be assisted by any decision of the Supreme Court is unrealistic in the extreme.
  12. Furthermore, and although this is a factor which affects only some but not all cases (it does affect the two cases before me), there is an extent to which the Supreme Court will also have to consider the previous regime of extortionate credit bargains ("ECBs") which the unfair relationship regime replaced. The reason for that is this. Although, not formally stated in the section of the Notice of Appeal for the Supreme Court called Grounds of Appeal, it is plain from the arguments in support of it, and which are likely to be raised at the appeal itself, that one point to be made is this: because of the high element of commission and the large costs, these were policies whose prices, if dealt with under the old ECB regime, would be described as "colourable" and where the transactions themselves would be liable to be reopened as ECBs. Thus, it is argued that it would absurd if such agreements were liable to be reopened under the earlier regime but yet did not constitute an unfair relationship under the present one, bearing in mind that the later regime was said to be wider and more flexible than that which it replaced.
  13. Another way in which the argument was put, albeit only in the document produced to the Court of Appeal when seeking permission from it to appeal to the Supreme Court is set out at paragraph 16 of Miss Bala's skeleton argument. There is a clear emphasis here on what is described as "exorbitant pricing". That is of some relevance for the particular cases before me because, given the relative age of some of the agreements and in the light of a decision which I gave in Barnes last year, some but not all of the agreements complained of can only be dealt with under the ECB and not the unfair relationship regime. Therefore, to the extent that the Supreme Court engages in an analysis of the two regimes, that is likely to be highly relevant here.
  14. There is no way of splitting out these claims, even if the ECB regime did not feature in the Supreme Court decision. It is not being suggested, for example, that the ECB elements of this litigation could proceed, leaving the rest to await the decision of the Supreme Court if I took the view that the unfair relationship matters ought to be stayed, and that is obviously right. These claims must be examined in the round and dealt with together.
  15. Mr Strachan, who has argued the case for the Claimants succinctly and persuasively, says that the decision in the Supreme Court is likely to be much narrower and to the extent that the Supreme Court pronounces more widely, upon the ECB regime, that would be obiter. That nay be but in general terms, when the Supreme Court undertakes its first review of these sections, it is likely that very considerable regard will be had to all of its observations, even if strictly speaking some of them are not binding.
  16. Mr Strachan also points out that the bank has not made any kind of concession that, if the Supreme Court were to decide in a particular way, it must follow therefore that some of the claimants' claims here will succeed and nor have the claimants made a concession the other way. However, that is not surprising. The precise ambit of any Supreme Court decision will have to await the decision itself, but I am in absolutely no doubt that in this area of the law it is going to be of the greatest relevance to claims such as this and those who conduct those claims on both sides of them. In the light of all of that I reject the overarching submission made by Mr Strachan, on behalf of both claimants, that any decision in the Supreme Court is likely to be of limited impact in respect of these two particular claims or at least, whatever impact it does have, it is limited so that it should not justify the grant of a stay.
  17. There is no doubt, and Mr Strachan has not sought to argue to the contrary, that among the numerous allegations made against Black Horse in these cases, and leaving aside questions of ECB and other allegations like negligence and misrepresentation, there are clear references to the whole question of costs, commission, colourability and the effect of commission on the allegation as to whether the cost is too high or not. See in particular paragraphs 24, 27 and 28 of the present Re-Amended Particulars of Claim in Barnes and paragraphs 16.3, 16.4, 27, 28, 36, 37 of the proposed Amended Particulars of Claim in McIlquham.
  18. These Claimants could have taken the view, as others have, that they will now abandon the unfair relationship points referred to in paragraph 15 above and reduce their cases down to claims which are clearly outwith Harrison but that course has not been taken here. Therefore those unfair relationship claims will have to be dealt with at trial. If the Claimants fail on such claims because of the decision of the Court of Appeal then, unless they succeed sufficiently on the other grounds, there is a very real possibility that they will seek permission to appeal from the Court of Appeal. One basis for any such claimed grant of permission would surely be that the Supreme Court will shortly be deciding this very issue. Understandably, neither claimant is prepared to undertake before me that it will not seek such permission to appeal if it loses in this way at first instance.
  19. It is against that background that Black Horse invite me to stay both of these claims pending the decision of the Supreme Court. Black Horse acknowledge that in one sense the risk of proceeding to trial at the moment is greater for the claimants because the law in respect of unfair relationships, costs and commissions may now be said, very broadly speaking, to be against them. Thus, says Mr Strachan, if the claimants are prepared to take that risk and proceed, there is no basis for Black Horse to object. However, that, in my judgment, puts the matter too narrowly.
  20. First, it can be said with some force that it is the position of the claimants which is somewhat curious since the appeal which is awaited is one which other claimants in the same position and through the same solicitors have actually brought, in order to reverse the adverse decision of the Court of Appeal against them, and I have already noted that when the matter was proceeding before the Court of Appeal the claimants were the ones to go to the court and seek a stay.
  21. Secondly, one does need to examine the position in the context of my general powers to order a stay pursuant to CPR 3.1(2)(f) which have to be exercised with regard to the overriding objective. I mention in particular CPR 1.1(2)(b): saving expenses and dealing with a case which is proportionate given the amount of money involved, the importance of the case, the complexity of the issues, ensuring it is dealt with expeditiously and fairly and allocating an appropriate share of the court's resources. First and foremost, there is the question of proportionality. In the light of the impending reforms to be introduced in April 2013, following the Jackson report on costs which centre on the need for proportionality in litigation, especially on costs and case management measures affecting them, I consider that particular attention needs to be paid to that need.
  22. In this respect one notes that PPI claims in general are fairly modest. For example, in Barnes the total cost of the PPI premium payments complained of is about £7,000. That is really, plus interest, the maximum scope of any claim but it is likely to be reduced if an argument succeeds that PPI was required in any event albeit it could have been bought more cheaply because credit would have to be given for that. In this case, the costs to date are a very substantial sum of £50,000 and the costs to trial are estimated at £98,000. That is exclusive of ATE insurance and the potential uplift under the conditional fee agreements which govern both cases. In McIlquham, the money involved in the PPI claim, broadly, is about £3,200. The costs to date are some £19,000. Black Horse has already spent about £160,000 on these and the other Miller Gardner cases. I do not believe that the significant discrepancy between the amounts claimed and the amount of costs involved, as one can perceive in this case, are untypical of other cases. In those circumstances, it is important that litigation of this kind is managed proportionately and with a keen eye to avoid the incurring of unnecessary, or potentially unnecessary, time or costs.
  23. That plainly suggests to me that when the Supreme Court is going to consider areas of law which are effectively new for it and which will clearly encompass some of the essential issues involved in these cases, and indeed in many others of the same kind, there is an obvious advantage in waiting until the Supreme Court has decided those issues. The result is likely, depending on the outcome, and even without any formal undertakings by either party, to dispose of some of the claims either in favour of the claimant or in favour of the defendant without a trial. It will in any event, provide a proper focused basis for considering the true scope of the evidence and the factual findings which the court at first instance will be required to make.
  24. Of course, I accept that some factual issues will be the same in any event, but that does not deprive the Supreme Court decision of its usefulness. I have already indicated that the claimants will not give an undertaking that they would not seek permission to appeal any adverse decision at the first instance in these two cases and that of course is their right, a right which they sought to exercise in Barnes last year; but the effect of that is that one has to regard as a very real possibility that if the claims are decided adversely to the claimants the matter will not stop there but will proceed, subject to any grant of permission, to a further appellate stage.
  25. Now, having regard to the overriding objective, I obviously have to consider also the financial position of the claimants and in particular how that might be affected by any delay while we await the decision of the Supreme Court. Although the delay is significant, it seems to me that there is really little or no prejudice. Of course, as Mr Strachan says, if the claimants are right then they have paid out money which they should not have paid out and they will be entitled to an award but that can be compensated for by statutory interest. Not is there any specific evidence or submission indicating any particular hardship in relation to these matters. Indeed, it is noteworthy that the litigation to recover the sums did not commence until many years after the agreements in question.
  26. So far as costs are concerned, there is no real prejudice to the claimants at the moment because they have not had to incur in the sense of defray any money on account of their own costs. That is because they are covered by a conditional fee agreement which does not require them to pay any or any significant money up front and they also have the benefit of after-the-event insurance. I have, of course, to consider the objective of dealing with the cases expeditiously and fairly and Mr Strachan says that there is simply a right to bring the matter on to trial. However, given the impact, or the likely impact, of the Supreme Court decision, that objective has to be tempered, in my judgment, for the reasons already given.
  27. Of course, had there been some real or material prejudice as a result of the delay, other than the passage of time itself, the position might be different. There is no such evidence or submission before me. It has not been suggested that the additional delay is going to cause memories to fade or arguments of that kind. That would have been wholly unrealistic on the basis that, if memories were going to fade, they would have faded long before this litigation commenced.
  28. However there is, in my judgment, a potential prejudice to Black Horse if the stay is not granted because if it wins at first instance and then, ultimately, on an appeal it loses, it is likely to have lost the costs of the trial and may have to pay the claimants' costs of that because the Supreme Court ruling effectively goes against it. Or the matter may be remitted for a new trial. It is no answer to say that this is simply an inevitable risk of litigation because there is always a prospect of an appeal, when there is a sensible and proportionate route which will avoid that risk happening. That is to wait for the Supreme Court to decide before taking any further steps and therefore incurring any further costs which may prove to have been unnecessarily incurred. Indeed that benefit assists the claimants as well because, if the Supreme Court confirms the Court of Appeal or renders all or any part of these claims not viable, it is surely better for the claimant to know that now before it incurs the expenses of trial. Following any such decision, it is likely to take the sensible view that there is no point pursuing those claims.
  29. I have also to consider the allocation of court time and this is a factor as well, looking perhaps beyond the two cases before me, certainly to the other six cases which are similar and conducted by the same solicitors. This is because a considerable amount of court time would be saved if one awaits the Supreme Court decision, which, for reasons already given, is likely one way or the other to narrow the amount of litigation which the court thereafter will have to deal with.
  30. Mr Strachan suggests there may be points under Article 6 of the Human Rights Act in terms of the ability to hold a trial within a reasonable period and of course tells me that one measures that by looking at the time from which the claim has been issued; but the fact is that in both these cases there has already been a significant period of delay which certainly cannot be laid at the door of Black Horse and certainly in the case of Barnes a very substantial amount of time was taken up with successive amendments and issues of that kind. So I am not persuaded at all that, by granting a stay in the terms asked, that there is any infringement of either claimant's Article 6 rights.
  31. I should, at this point, simply mention what has been happening elsewhere in the country. I am told that there are a number of other applications being made of the same kind and in some cases, by Black Horse. Most of those have either been adjourned pending my decision in the High Court or they have yet to take place. The only decision that has been made of which I am aware is that made by as recently as 12th June by His Honour Judge Chambers QC, the mercantile judge in Cardiff, in Gilley v Barclays Black Horse Limited in the Cardiff County Court. I have counsel's note of his judgment. It is not necessary to read all of it but, broadly speaking, the PPI claim before him contained the same sort of set of allegations here. Having analysed the arguments, judge took the view, as I have, that it is not prudent to assume that the ambit of the Supreme Court decision is going to be as narrow as the claimants contend and concludes that the trial judge would be in an unhappy position if he was to make a decision now without the benefit of the Supreme Court decision. If the case came on nearer to the Supreme Court decision he might then have to adjourn his judgment or adjourn the hearing then to wait what the Supreme Court had to say. HHJ Chambers QC ends in this way: "..however sympathetic I am to the Claimants who want the case to be heard and which has already been postponed (voluntarily and in part for the Court of Appeal decision) one knows it would be far better if we wait for what the Supreme Court says. I doubt that the Supreme Court will confine itself in such a particular and unhelpful way to the limited situation as opposed to dealing with what the proper general approach to Section 140A should be..I do not think it right to proceed in the shadows." I respectfully agree with all of that.
  32. Mr Strachan, as something of a fallback position, reminds me that I could always give case management directions to at least allow the cases to progress a little further down the road and then perhaps stop there matters, but I cannot see, in reality, what that is likely to achieve or that there would be any real saving of court time and costs. In the case of Barnes, disclosure has been made. In the case of McIlquham, one has not got to that stage. Witness statements might have to be reshaped following a decision of the Supreme Court. So, it cannot be said that they could be served once and for all now and there would be no further costs in revisiting them. On any view, there could not on this fallback position be a trial until after the Supreme Court has decided.
  33. Mr Strachan raises the spectre that, unless at least further steps are taken towards trial, there is then going to be some very substantial delay before the case can actually be heard. Certainly, for my part, that is not the way in which the courts work here. Both parties are very familiar with the general way in which disclosure or witness statements would be pursued in this kind of case because they have been doing many of them. There is no reason to think that following a decision in the Supreme Court, if the litigation was still to proceed, they would not be able to deal with questions of disclosure and witness statements and in short order. Given that these cases, even on a multi-track basis, are unlikely to go for more than a day or two or perhaps slightly longer, there is no difficulty in this court with arranging early hearing dates. So I do not regard there as being any utility in ordering anything other than an immediate stay.
  34. For all of those reasons, I am quite clear that both of these actions should be stayed. Of course, as with any order for a stay, it would be open to either party, if there has been some material change of circumstance, at least to apply to the court to lift that stay and I will include the usual permission to apply in the order. Accordingly, I accede to both of these applications and conclude simply by expressing my grateful thanks to both counsel for the excellence of their oral and written submissions before me. I will now deal with any ancillary matters.

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