Brandon v American Express Services Europe Ltd

A default notice under the Consumer Credit Act 1974 must allow the statutory minimum period to remedy a breach. Where its wording may fail to provide that period because it runs from the date of the notice rather than service, the issue cannot be dismissed as de minimis or cured by absence of prejudice at summary judgment.

A claimant seeking summary judgment must formulate its case and any alternatives clearly before the hearing. Although an appellate court may admit an alternative legal basis, a significant unpleaded change of case emerging on appeal may make summary judgment unfair and impermissible.

Mr Brandon entered into a regulated credit card agreement with Amex. After missed payments, Amex served a default notice requiring payment within fourteen calendar days from the date of the notice, followed by a notice of cancellation, and brought proceedings for the outstanding debt.

Deputy DJ Gisby granted Amex summary judgment. HHJ Denyer QC dismissed the appeal, treating the contractual termination clause as an effective alternative basis. Before the Court of Appeal, Mr Brandon challenged the validity of the default notice and argued that Amex could not introduce non-default contractual termination at the appellate stage. The central issues were whether the default notice was sufficiently compliant and whether contractual termination could sustain summary judgment.

The appeal was allowed. The Court of Appeal unanimously held that summary judgment could not stand on the reasoning advanced.

1. Default notice. Under the Consumer Credit Act 1974, a default notice must allow at least fourteen days after service to remedy a remediable breach. The notice stated that payment was required within fourteen calendar days from the date of the notice. Although postal service was permitted by section 176, the Court could not assume that delivery occurred sufficiently quickly for the statutory period to have been allowed. The validity issue was realistically arguable. It could not be treated as de minimis merely because Mr Brandon suffered no prejudice or had no intention of paying.
2. Contractual termination. The notices were framed solely on default. The Court did not accept that default and non-default termination necessarily required an election, or that the notices were inevitably fatal to reliance on clause 10(2). However, any alternative contractual case had to be clearly formulated, preferably before the first-instance hearing.
3. Late change of case. Amex had not pleaded or argued contractual termination before DJ Gisby. The alternative case emerged materially during the appeal, without proper procedural groundwork, and raised substantial issues under sections 76 and 98 of the Act and regulation 5(1) of the Regulations. An appellate court has discretion to admit an alternative legal argument, but allowing this significant change of case fell outside the proper exercise of that discretion in a summary-judgment appeal. Ladd v Marshall concerned fresh evidence and did not prevent the Court from considering the separate discretionary issue.
4. Other matters. The Court expressed no final view on the applicability of sections 76 and 98 or the alleged unfairness of clause 10(2), although it inclined towards Amex’s position on those points. The later section 98A termination route did not provide the basis for the present judgment. The dismissal of the counterclaim was upheld, and no extensive disclosure concerning the monthly charge was justified.

Appeal allowed.

1. Court of Appeal (Civil Division): On [2011] EWCA Civ 1187, Gross LJ, with Pill LJ and Sir Richard Buxton agreeing, allowed the appeal.
2. High Court: HHJ Denyer QC dismissed the appeal from the summary judgment granted by Deputy DJ Gisby and held that contractual termination was an effective means of ending the agreement.
3. District Judge: Deputy DJ Gisby granted Amex summary judgment following the hearing on 5 June 2009.