The Official Receiver v Shop Direct Finance Company Limited

Under the limitation rule in the Financial Ombudsman Service scheme, “the complainant” cannot invariably mean the trustee in bankruptcy whenever the trustee brings a complaint concerning a bankrupt consumer. The expression must be construed purposively and contextually within the scheme.

A declaration making the trustee’s awareness exclusively decisive was therefore erroneous, particularly because it could restart an already running three-year period. The court declined to declare that the bankrupt’s awareness was invariably decisive because attribution of the trustee’s knowledge and other fact-sensitive questions remained unresolved.

The Official Receiver, acting as trustee in bankruptcy for numerous consumers, submitted complaints concerning mis-sold payment protection insurance. Shop Direct Finance Company Limited sought a declaration that, under DISP 2.8.2R(2)(b) of the Financial Conduct Authority Handbook, the relevant awareness for the three-year referral period was that of the Official Receiver rather than the bankrupt.

The High Court granted that declaration in [2022] EWHC 1355 (Comm). The Official Receiver appealed. The central question was whose actual or constructive awareness governed the limitation period when a trustee in bankruptcy pursued a complaint on behalf of a bankrupt consumer.

1. Appeal allowed. The declaration that the relevant awareness was invariably that of the Official Receiver could not stand. DISP must be construed as a coherent statutory scheme. Its language and PPI provisions generally focus upon the underlying consumer, even where another person makes the complaint on that consumer’s behalf. The High Court’s construction could also produce the absurd result that a three-year period already running against the consumer restarted upon bankruptcy (Singh LJ, Carr LJ agreeing).

2. Within DISP 2.7.2R, a trustee in bankruptcy is authorised by law to bring a complaint “on behalf of” the bankrupt. In this statutory context, that phrase means in the place of, rather than denoting conventional agency. The interpretation of DISP 2.8.2R(2)(b) did not depend upon technical questions concerning vesting under the Insolvency Act 1986.

3. The court declined to substitute a declaration that the bankrupt’s awareness was invariably decisive. That proposition could leave no effective time limit where a consumer had died or had never acquired the relevant awareness. Questions concerning the possible attribution or imputation of the Official Receiver’s knowledge had not been decided below or argued on appeal. They could involve factual as well as legal issues.

4. The Respondent’s Notice failed. Pre-enactment consultation papers and policy statements were inadmissible as aids to construction beyond identifying the legislative mischief. Construing “complainant” as the bankrupt did not render DISP ultra vires section 226 of the Financial Services and Markets Act 2000. Although the Official Receiver could be described as a statutory trustee, the Official Receiver was not an eligible complainant because the relationships required by DISP 2.7.6R(5) or (6) were absent.

5. Nugee LJ concurred in the result but proposed a more specific construction. In his view, awareness is that of the person who, at the relevant time, has both the right and an interest in bringing the complaint. Time begun while the consumer was alive and solvent continues after death or bankruptcy. If it had not begun, the subsequent awareness of the personal representatives or trustee starts the period. Carr LJ expressly left the merits of this approach open because the parties had not addressed it.

6. The High Court’s declaration was set aside. No alternative declaration was made.

1. Court of Appeal (Civil Division): In [2023] EWCA Civ 367, allowed the Official Receiver’s appeal and set aside the declaration, but declined to make an alternative declaration.
2. High Court, Commercial Court: In [2022] EWHC 1355 (Comm), granted a declaration that the relevant awareness under DISP 2.8.2R(2)(b) was that of the Official Receiver as trustee in bankruptcy rather than that of the bankrupt.