Carey v HSBC Bank Plc

A creditor may comply with section 78 of the Consumer Credit Act 1974 by supplying an honest and accurate reconstituted copy of the executed agreement, derived from sources other than the signed original. The copy must include the debtor’s name and address as at execution, but need not reproduce the form required by the Consumer Credit (Agreements) Regulations 1983. Where the agreement has been varied, the original agreement and the varied terms must both be supplied. A breach of section 78 alone does not create an unfair relationship. The court has jurisdiction to declare whether a breach occurred, but the grant of relief is discretionary. An improperly executed agreement cannot be inferred merely from the absence or defect of a section 78 copy.

The judgment determined six preliminary issues arising from numerous credit-card claims concerning requests under section 78 of the Consumer Credit Act 1974. The issues concerned the form and content of copies of executed agreements, agreements varied under section 82, unfair relationships, declaratory relief, the containment of prescribed terms, and the consequences of an alleged absence of a signed document containing those terms.

The court also considered strike-out and summary judgment applications in claims brought by Mohammed Adris and Shafeel Yunis. Those claims alleged statutory non-compliance, improper execution and unfair relationships. The central questions were what section 78 required and whether the pleaded claims disclosed a viable basis for relief.

1. Section 78 copies. A creditor may provide a reconstituted version of the executed agreement. It need not be derived directly from the signed original, provided that it is honest and accurate. The purpose of section 78 is informational rather than to provide conclusive proof of execution. The copy must nevertheless contain the debtor’s name and address at the date of execution, although those details may be obtained from the creditor’s records.
2. The copy need not comply, as to form, with the Consumer Credit (Agreements) Regulations 1983. The form and content of copies are governed by the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983, including the requirement of easy legibility.
3. Variations. Regulation 7 of the Copies Regulations requires a copy of the original executed agreement together with either the latest notices of variation for each varied term or a statement of the terms as varied. It does not permit the creditor to provide only a single statement of current terms.
4. Unfair relationships. A breach of section 78 alone does not establish an unfair relationship under section 140A. The allegation must be assessed against the particular facts and circumstances of the relationship. The debtor’s alleged uncertainty about whether the creditor will cure a section 78 default does not alter that conclusion. The court followed McGuffick v RBS in treating the underlying contractual liability as continuing during the period of unenforceability.
5. Declarations. The High Court and County Court retain jurisdiction under CPR 40.20 to declare whether section 78 has been breached. The answer to whether relief should be granted is fact-sensitive. Relevant considerations include the other relief sought, the practical utility of the declaration, the parties’ justice and whether proceedings were commenced prematurely or disproportionately.
6. Prescribed terms and applications. Whether separate sheets form one document is a question of substance. On the assumed facts, a signed page physically attached to terms containing the prescribed terms formed one document. The claims by Adris and Yunis based on improper execution were struck out or dismissed. The absence of a signed section 78 copy did not establish that no properly executed agreement existed. A claimant had to advance a positive pleaded and evidential case; speculative claims were abusive. Consequential orders were reserved.