Zoan v Rouamba

A replacement-vehicle hire agreement is regulated under the Consumer Credit Act 1974 unless it satisfies the relevant exemption. Under paragraph 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989, repayments must be required within 12 months beginning with the agreement date, which includes that date. By contrast, after or from ordinarily excludes the specified date. A term allowing payment until the first anniversary may therefore extend repayment by one day beyond the exemption period. Contractual interpretation cannot recast ordinary wording merely to achieve exemption. A consumer’s awareness of one party’s purpose does not establish shared contractual intention or waiver of statutory protection.

The claimant’s vehicle was damaged in a road accident caused entirely by the defendant. The defendant’s insurers paid for repairs, but disputed the claimant’s entitlement to recover the cost of replacement vehicles hired on credit while his vehicle was unavailable.

The Northampton County Court awarded damages for the hire charges. Three of four agreements were challenged as improperly executed and unenforceable under the Consumer Credit Act 1974. The trial judge held that the contractual period of 12 months included the agreement date and that the agreements were exempt. The defendant appealed. The central issue was whether the wording of the agreements satisfied the exemption in paragraph 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989.

Lord Justice Chadwick delivered the judgment of the Court. The appeal was allowed in relation to the hire charges under the first three agreements.

1. Late new point. The Court refused to admit the respondent’s late notice raising the contention that agreements providing credit without limit could not fall within section 8(2) of the Consumer Credit Act 1974. The point was materially different from the issue tried, had not benefited from first-instance consideration, threatened to extend a tightly listed test-case hearing, and was connected with litigation subject to a stay. The Court expressed no view on its merits.
2. Statutory exemption. The first three agreements were treated as consumer credit agreements under section 8(2), while the fourth was outside the statutory limit. Under section 8(3), a consumer credit agreement is regulated unless it is exempt. Paragraph 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989 required no more than four payments within 12 months beginning with the agreement date. The words beginning with included that date. The Court followed the reasoning in Trow v Ind Coope (West Midlands) Ltd and rejected the argument that the Directive required a different construction.
3. Contractual wording. Condition 10.1 allowed payment on or before 12 months after the agreement date. Read with condition 10.3.1, referring to the first anniversary, that wording excluded the agreement date. It therefore allowed payment for one day longer than the statutory exemption period. The agreements were regulated and not exempt.
4. Interpretation and background. The principles in Investors Compensation Scheme Ltd v West Bromwich Building Society did not justify treating the wording as inclusive. The ordinary meaning of after or from excluded the specified day, and the hirer could not be attributed knowledge of the consumer-credit exemption provisions merely because they were available to the hire company. Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd was distinguished: it concerned a unilateral notice and an obvious error known to the recipient, whereas this case required an expressed consensus between contracting parties. Knowledge of one party’s purpose alone could not establish that consensus or justify depriving the hirer of statutory protection.

Order: appeal allowed with costs. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division), [2000] EWCA Civ 8: allowed the appeal concerning the first three hire agreements, with costs; permission to appeal was refused.
• Northampton County Court: on 19 July 1999, His Honour Judge Harris QC awarded damages for replacement-vehicle hire charges and treated the relevant agreements as exempt.