Woodchester Lease Management Services Ltd v Swain & Co

For a regulated consumer hire agreement, a default notice under the Consumer Credit Act 1974 must accurately state what the hirer must do to remedy a remediable breach. Where the remedy is payment, the notice must specify the sum actually due. A material overstatement invalidates the notice because the statutory scheme gives the hirer only a short period to understand and remedy the alleged default. Authorities concerning differently worded forfeiture or agricultural holdings provisions do not justify a more lenient approach. A merely de minimis error may be overlooked, but a substantial demand above the amount due cannot be treated as compliant.

Woodchester, the owner under a rental plan for a photocopier, sued Swayne & Co after the hirers stopped making payments. The agreement was a regulated consumer hire agreement. Woodchester served a default notice demanding £879.90, although the actual arrears were £634.30.

The Cardiff County Court, before Assistant Recorder Higginbottom, entered judgment for £13,453.07. The hirers appealed on the question whether the inaccurate demand invalidated the notice. A further ground concerning penalties was not argued. The central issue was whether a default notice demanding more than the sum actually due complied with the statutory requirements.

Lord Justice Kennedy delivered the leading judgment, and Mr Justice Sumner agreed. The appeal was allowed with costs.

1. Statutory scheme. The rental plan was admitted to be a regulated consumer hire agreement. Under section 87(1) of the Consumer Credit Act 1974, a default notice was required before termination of the agreement or repossession of the goods. Sections 88 and 89, together with the 1983 Regulations, specified the notice’s content and the opportunity to remedy the breach.
2. Accuracy required. Section 88(1)(b) required the lender to specify what action was required to remedy a remediable breach. In a case involving arrears, that meant stating accurately the sum payable. A demand for more than the amount lawfully due was materially misleading and rendered the notice invalid.
3. Purpose and timing. The legislation protected hirers dealing with standard-form agreements issued by financial organisations. The lender could calculate the sum due, whereas the hirer might have only seven days to obtain advice and identify an error. The possibility that a trivial or de minimis error might be overlooked did not assist Woodchester, since the overstatement was plainly material.
4. Authorities. The approach in Silvester v Ostrowska [1959] 1 WLR 1060 and Shepherd v Lomas [1963] 2 All ER 902 could not be transferred to section 88 because the statutory wording and protective purpose differed. Dickinson v Boucher [1983] 269 EGLR 1159 also involved materially different statutory language. Handel v The City of London Brewery [1901] Ch D 496 and Fox v Jolly [1916] 1 AC 1 were historical examples of statutory notice requirements.
5. Orders. The judgment below was adjusted to £634.30 plus interest, totalling £1,154.42. Costs in the lower court were ordered on scale 1, and the appeal carried costs.

1. Court of Appeal (Civil Division) allowed the appeal with costs: [1998] EWCA Civ 1209.
2. Cardiff County Court On 3 October 1997, Assistant Recorder Higginbottom entered judgment for Woodchester for £13,453.07 with costs on County Court scale 2.