Wilson v Robertsons (London) Ltd

For the purposes of Consumer Credit Act 1974 section 106(d), repayment on renewal of a pawnbroking agreement requires an amount to have been received by the creditor. Transferring an existing debt to a new agreement does not, without more, amount to payment of the principal. The statutory remedies for ineffective security do not exclude a separate common law claim where pledged property is sold without lawful authority. Damages may reflect the reasonable cost of replacing a unique chattel where no ordinary market replacement exists.

The claimant brought proceedings concerning 27 regulated pawnbroking agreements made with the respondent. The agreements had been held defective and extortionate. The remaining issues included repayment of principal and interest, damages for the sale of a gold signet ring under an unenforceable agreement, interest for delay, and costs.

HH Judge Walker in Wandsworth County Court, in decision WL100916, decided the repayment and ring-damages issues in the respondent’s favour. Permission to appeal was granted on those issues. Permission was also sought on interest but was refused. The central questions were whether transferring existing principal into successive renewal agreements amounted to receipt of payment under section 106(d), and whether the claimant could recover common law damages for the ring’s unauthorised sale.

1. Repayment of principal. The appeal was dismissed on the claim for additional repayments. Section 106(d) requires an amount to have been received by the creditor on realisation of the security. The evidence showed that no principal changed hands when the agreements were renewed. The existing indebtedness was transferred to the new agreement, while the claimant paid only interest and fees. Calling the transactions novations did not determine their financial effect. A novation means substitution of a new agreement for an old one, without specifying the terms of substitution.
2. Wilson v Howard. Wilson v Howard (Pawnbrokers) Ltd [2005] EWCA Civ 147 did not preclude the court from giving effect to the facts found in this case. That decision proceeded on the basis that capital and interest had been paid at each renewal. It did not establish that a renewal involving only transfer of existing debt constituted payment of principal.
3. Loss of the ring. The appeal was allowed on damages. Section 170(1) did not bar the claim because it was a common law claim for conversion, not a claim for breach of a statutory requirement. Once the security became ineffective, the respondent had no right under the pawn agreement to sell the ring. The statutory remedies under the Consumer Credit Act 1974 were compatible with a parallel common law claim.
4. Measure of damages. Where a converted chattel has special characteristics and no ordinary market replacement is available, damages may be assessed by the reasonable cost of obtaining or having a substitute made, subject to reasonableness. Applying J & E Hall Ltd v Barclay [1937] 3 All ER 620, the appropriate figure was £1,020, subject to submissions on interest and the possibility of the respondent arranging a replacement at trade cost.
5. Interest. Permission to appeal on interest for delay caused by the stay was refused. The proposed reliance on Mathew v T.M.Sutton Ltd [1999] GCCR 1865 had not been sufficiently developed and it was too late to pursue the point.
6. Lord Justice Moses agreed with Lord Justice Carnwath. The appeal was therefore allowed in part, with further submissions invited on the form of order concerning the ring.

• Court of Appeal (Civil Division) — Appeal from HH Judge Walker in Wandsworth County Court, decision WL100916. The appeal was dismissed on additional repayment, allowed on damages for the lost ring, and permission to appeal on interest was refused.
• Earlier proceedings — HH Judge Rose heard the claim, and an appeal before Laddie J followed. The combined effect of those decisions was that the agreements were defective and extortionate.