Thew & Anor v Cole & Anor

Under the Consumer Credit (Exempt Agreements) Order 1989, the 12-month exemption period includes the date of the agreement and permits payment at its final moment. An obligation to pay may therefore arise when a permitted period of deferred payment ends. Ketley v Gilbert [2001] 1 WLR 986 was confined to wording requiring payment “on the expiry” of 12 months, which permitted payment after expiry. The agreement must be construed as a whole. A statement that an agreement is exempt and the contra proferentem rule are aids of last resort. A test-case judgment for the full hire charge does not establish that the full charge is recoverable in every case.

These conjoined appeals concerned credit-hire charges arising after road accidents. In King v Daltray, Alpha deferred payment until the third-party claim concluded or 12 months from the agreement, whichever was earlier. In Thew v Cole, Western’s credit agreement provided for payment of the hire charges within 12 months. The Liverpool and Cardiff County Courts held that the agreements were exempt from regulation under the Consumer Credit Act 1974. The appellants challenged the construction of the 12-month exemption in Article 3(1)(a)(i) of the 1989 Order. The King appeal also raised issues concerning prescribed terms, enforcement and quantum. The central issue was whether payment was required within the prescribed period.

Both appeals were dismissed. The Court of Appeal unanimously upheld the conclusion that both credit-hire agreements were exempt.

1. Article 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989 applies where fixed-sum credit payments are required within a period not exceeding 12 months beginning with the agreement. The period includes the date of the agreement and extends to its final moment.
2. The Alpha agreement deferred payment for no more than 12 months from the start of the agreement. The obligation to pay arose at the same moment as the agreed period of deferral ended. No artificial division of a second was required, and payment at that point was within the statutory period.
3. Zoan v Rouamba [2000] 1 WLR 1509 and Ketley v Gilbert [2001] 1 WLR 986 concerned materially different wording. In Ketley, “on the expiry” meant after the expiry of 12 months. That reasoning did not determine agreements referring to a period of “not more than” 12 months or to the period beginning with the agreement. Lord Justice Jonathan Parker agreed that the final moment was included.
4. The Western agreement had to be read as a whole. The references to 12 months in clauses 2 and 5 were intended to have the same meaning. Construed consistently, the agreement was not ambiguous and was exempt.
5. The contractual statement that an agreement was exempt, and the contra proferentem rule, were aids to construction of last resort and had no part in the conclusions reached.
6. The judge in King was entitled, on proportionality grounds, to decline a further individual investigation of the hire charges after a lengthy test-case trial. The decision did not mean that the full charges were recoverable in every Alpha case. The principles in Dimond v Lovell [2002] 1 AC 384, considered further in Burdis v Livsey [2002] EWCA Civ 210, remained applicable.

The Thew matter was remitted to Cardiff County Court for assessment of damages. The appellants were ordered to pay the respondents’ appeal costs.

1. Court of Appeal (Civil Division) In Thew & Anor v Cole & Anor and the conjoined appeal in King v Daltray, both appeals were dismissed: [2003] EWCA Civ 1828. The Thew matter was remitted for assessment of damages.
2. Cardiff County Court His Honour Judge Masterman held that the Western credit agreement was exempt, reversing the earlier district judge’s conclusion that it was regulated.
3. Liverpool County Court His Honour Judge Marshall-Evans QC held that the Alpha rental agreement was exempt from regulation.