GAIL STEINER v NATIONAL WESTMINSTER BANK PLC

For a debtor-creditor-supplier agreement under section 12(b) of the Consumer Credit Act 1974, the creditor’s credit agreement must be made under, or in contemplation of, arrangements between the creditor and the supplier. The existence of arrangements between the creditor and an intermediary, and separate arrangements between that intermediary and the supplier, does not necessarily establish arrangements between the creditor and the supplier. A broad construction of “arrangements” does not permit the statutory requirement to be extended to arrangements of which the creditor was not part and which arose independently of the creditor’s credit agreement.

Gail Steiner appealed against HHJ Freedman’s decision in the Newcastle-upon-Tyne County Court on a preliminary issue. Her late husband had purchased timeshare rights from Club La Costa Vacation Club Ltd and paid the purchase price by NatWest Mastercard payments made to First National Trustee Company Ltd, trustee under a trust deed involving Club La Costa.

The central issue was whether the Mastercard credit agreement between Mr Steiner and NatWest was made under pre-existing arrangements, or in contemplation of future arrangements, between NatWest and Club La Costa, despite the payments being made to the trustee.

1. Appeal dismissed. The existence of a debtor-creditor-supplier agreement was essential to the claim under sections 56(1)(c) and (2) of the Consumer Credit Act 1974.
2. Section 12(b) required the credit agreement to have been made under pre-existing arrangements, or in contemplation of future arrangements, between the creditor and the supplier. The relevant starting point was the making of the credit agreement between NatWest and Mr Steiner.
3. OFT v Lloyds TSB Bank Plc established that direct contractual relations were unnecessary where the creditor and supplier were members of the same credit-card network. The network itself constituted arrangements between its members. That decision did not establish that arrangements between a creditor and an intermediary, combined with separate arrangements between the intermediary and the supplier, necessarily constituted arrangements between the creditor and supplier.
4. The Mastercard network constituted arrangements between NatWest and its members, including merchants. It did not follow that NatWest’s credit agreement was made under, or in contemplation of, the trust deed between FNTC and Club La Costa, or other arrangements between network members and third parties. The consumer-protection purpose of the Act could assist construction in cases of ambiguity, but could not justify stretching the statutory language beyond its natural and ordinary meaning.
5. Bank of Scotland v Alfred Truman provided limited assistance because it left the boundary of section 12(b) to be resolved case by case. The court declined to decide the appeal on the alternative factual basis that FNTC was not obliged to pass all payments to Club La Costa. Section 187(3) was inapplicable because the case did not concern associates; section 11(3) was not relied upon.

• High Court (King’s Bench Division): appeal from HHJ Freedman’s decision of 14 September 2021 in the Newcastle-upon-Tyne County Court. Appeal dismissed.