Shop Direct Finance Co. Ltd v Official Receiver

The court considered the construction of DISP 2.8.2R(2)(b) of the FCA Handbook (a rule made under the Financial Services and Markets Act 2000) which provides that the Ombudsman cannot consider a complaint if it is referred more than three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint. The central question was whether the term "complainant" in that rule refers to the underlying consumer (the bankrupt) or to the trustee in bankruptcy (the Official Receiver) who brings the complaint "on behalf of" the bankrupt.

The Court of Appeal allowed the Official Receiver's appeal and set aside the High Court declaration that the relevant awareness is always that of the Official Receiver. The court held that the correct construction is context‑sensitive: the relevant awareness is that of the person who for the time being has both the right to bring the complaint and an interest in doing so. In practice, if the consumer (while alive and solvent) becomes aware, the three‑year period runs from that awareness and continues to run against successors (personal representatives or trustee in bankruptcy); but if the consumer never became aware before death or bankruptcy, the period runs from the awareness (actual or constructive) of the person who then holds the right (personal representatives or trustee). The court declined to make any further declaratory relief because factual and other legal issues (for example attribution of the OR's knowledge to the bankrupt) were not fully litigated in the court below.

Background and parties. This appeal arose from Part 8 proceedings brought for a declaration as to the correct construction of DISP 2.8.2R(2)(b) in relation to payment protection insurance (PPI) mis‑selling complaints, where many potential complainants had become bankrupt. The Respondent (Shop Direct Finance) sought a declaration that the relevant awareness for limitation was the awareness of the Official Receiver (OR) as trustee in bankruptcy. The OR appealed against the High Court declaration in his favour. The case came from the Commercial Court: Stephen Houseman KC ([2022] EWHC 1355 (Comm)).

Nature of the application and issues framed.

• The primary issue was the construction of DISP 2.8.2R(2)(b): whether "complainant" means the bankrupt (underlying consumer) or the trustee in bankruptcy (the OR) who brings the complaint "on behalf of" the bankrupt.
• Procedural and subsidiary issues included whether the OR is "authorised by law" to bring complaints under DISP 2.7.2R, whether the right to complain is property for insolvency purposes (s.436(1) IA 1986), the effect of the DISP backstop deadline for PPI (29 August 2019), and whether consultation materials are admissible to interpret DISP.

Key legal reasoning. The court applied the Handbook's interpretative provisions (GEN 2.2) and the approach in Re Lehman Brothers (CASS context) to read DISP purposively and as a coherent statutory scheme. The panel concluded that DISP is drafted primarily for the "paradigm" case of the underlying consumer complaining, but expressly contemplates complaints brought "on behalf of" consumers (personal representatives, trustees). The term "complainant" therefore must be interpreted by reference to the purpose of the particular rule. For DISP 2.8.2R(2)(b) specifically, the court identified the rule's purpose as avoiding injustice where a complainant is unaware of a cause of complaint while requiring prompt action once awareness arises. Applying that purpose the court held (i) where the consumer became aware while alive and solvent, time runs from that awareness and continues to run against successors; (ii) where the consumer did not (and could not) become aware before death or bankruptcy, the time runs from the awareness of the person who then holds the right (personal representatives or trustee); and (iii) the earlier High Court declaration (that the relevant awareness is always that of the OR) was too categorical and was set aside.

Procedural outcome and limits of decision. The Court of Appeal allowed the appeal and set aside the High Court declaration, but declined to grant any further declaration because factual and additional legal issues (including the Respondent's alternative argument on attribution or imputation of the OR's knowledge to the bankrupt) had not been fully argued or determined below.

Appeal allowed. The High Court declaration that DISP 2.8.2R(2)(b) refers always to the awareness of the Official Receiver was set aside. The court held that the identity of the relevant "complainant" is context‑sensitive and depends on who for the time being has both the right to bring the complaint and an interest in doing so; the panel declined to make any alternative declaratory order pending further factual and legal consideration.

Appeal from the High Court, Commercial Court (KBD) – Deputy High Court Judge Stephen Houseman KC: [2022] EWHC 1355 (Comm). This Court allowed the appeal: [2023] EWCA Civ 367.