Doyle v PRA Group (UK) Ltd

For a regulated credit agreement, a compliant default notice is not merely a procedural prerequisite to proceedings for accelerated payment. Under section 87(1) of the Consumer Credit Act 1974, service and expiry of the notice qualify the creditor’s substantive right to terminate the agreement or demand earlier payment. The cause of action for the outstanding balance therefore accrues only when the contractual and statutory conditions for accelerated payment have been satisfied. The result depends on construction of the agreement and applicable legislation. Potential delay in serving the notice does not alter that analysis.

PRA Group (UK) Ltd claimed the balance outstanding under a running-account credit card agreement made between Christopher Doyle and MBNA Europe Bank Ltd. The account was subject to the Consumer Credit Act 1974. After arrears arose, MBNA served a default notice requiring payment by 21 December 2009 and warning that the agreement might be terminated and the whole balance recovered.

PRA issued proceedings on 31 October 2015. A deputy district judge held that the claim was statute-barred because the cause of action accrued on breach, but HHJ Madge allowed PRA’s appeal, holding that it accrued after the period specified in the default notice. The issue before the Court of Appeal was whether the claim was barred by section 5 of the Limitation Act 1980, or whether the cause of action accrued only after the default notice had been served and had expired.

1. Appeal dismissed. HHJ Madge’s decision was correct.
2. A cause of action accrues when the claimant can state every existing fact necessary to establish the right to judgment. Clause 8f of the Agreement made payment of the whole balance subject to any notice required by law.
3. Section 87(1) of the Consumer Credit Act 1974 requires service of a compliant default notice before a creditor can terminate a regulated agreement or demand earlier payment. Without service and expiry of such a notice, a claim for the whole outstanding balance would face a complete defence and could be struck out.
4. The requirement is substantive, not procedural. Section 87(1) qualifies the creditor’s legal right to accelerated payment. Section 89 reinforces that construction because timely remedy of the specified breach means that the breach is treated as not having occurred.
5. Swansea City Council v Glass was distinguishable. Its statutory scheme indicated that the demand for payment was merely procedural, including through provisions governing interest and summary proceedings. No equivalent indication existed in section 87(1).
6. The issue depends on the wording and proper interpretation of the particular agreement and applicable statutory provisions. The materially different agreement in BMW Financial Service (GB) Limited v Hart required no reliance on that authority. The continued existence of the Agreement after default did not affect the analysis.
7. Policy concerns about delayed service and evidential prejudice did not justify a different interpretation. The position was broadly analogous to a loan repayable on demand, and the creditor remained responsible for proving its claim. The possible application of sections 140A and 140B was not determined and was unnecessary to the decision.

The claim was brought within six years of 21 December 2009. The appeal was dismissed.

• Court of Appeal (Civil Division): [2019] EWCA Civ 12 dismissed the appeal, holding that the cause of action accrued only after the compliant default notice period expired.
• Central London County Court: HHJ Madge allowed PRA’s appeal from the deputy district judge and held that the cause of action arose after the date specified in the default notice.
• Uxbridge County Court: Deputy District Judge Medlicott held that the cause of action arose on breach and that service and expiry of the default notice were only procedural preconditions.