JP Morgan Chase Bank, National Association v Northern Rock (Asset Management) Plc

A statement under section 77A of the Consumer Credit Act 1974 must comply materially with the statutory requirements and the prescribed regulations. Subject to regulation 41, a material error or omission means that the document is not a statement under the section and is ineffective for all purposes. The period of non-compliance is therefore calculated as if no statement had been served. For an agreement made before 1 October 2008, the first statement period is governed by article 5 of the Legislative Reform (Consumer Credit) Order 2008; subsequent statements must cover consecutive periods of no more than one year.

The claimant had acquired the beneficial interests in regulated fixed-sum credit agreements made before 1 October 2008. The defendant remained responsible for administering the agreements and supplied statements which omitted information required by the Consumer Credit (Information Requirements and Duration of Licences and Charges) Regulations 2007.

The parties agreed that the statements were materially non-compliant and that a period of non-compliance would continue until compliant statements were supplied. They disagreed on its commencement. The claimant argued that the defective documents were nevertheless statements under section 77A. The defendant argued that the period had to be calculated as if no statement had been served.

1. The defendant’s construction was accepted. A materially non-compliant statement is not a statement under section 77A and is ineffective for the purposes of the statutory scheme.

2. Regulation 41 preserves a statement containing an error or omission only where the error or omission does not affect the substance of the required information or wording. A material breach of the Regulations cannot be treated as a statement merely because the creditor intended to comply.

3. The phrase “statements under this section” must have a consistent meaning throughout section 77A. A document cannot be a statement under section 77A for the timing provision in subsection (1E), but not for the failure-to-provide provisions in subsections (5) to (7).

4. For an agreement made before 1 October 2008, article 5 of the Legislative Reform (Consumer Credit) Order 2008 permits the creditor to select the first statement period, provided that it begins no later than 1 October 2008 and ends no later than 30 September 2009. The “as if” wording means that the modifications apply to the first period only. Subsequent statements remain subject to the annual-period requirement.

5. Where no compliant first statement is served, the period of non-compliance begins on the day following the last day on which a compliant statement could have been given. In the case of the agreements considered, that was 31 October 2009.

6. The court treated the statutory provisions as a cohesive whole and found no absurdity or genuine anomaly in that construction. The parties were directed to agree the form of declaration. The claimant was provisionally ordered to pay the defendant’s costs, assessed on the standard basis if not agreed.

Not an appeal. The judgment was a first-instance decision of the High Court (Chancery Division).