NB: the UK Supreme Court judgment in this case has been handed down on 4 October 2023 - see the news article here.

Yesterday (12 January 2023), the UK Supreme Court considered the Appeal in the above two claims concerning the proper interpretation of section 140A of the Consumer Credit Act 1974. As we await the Judgment, let’s look back at the Court of Appeal decision being appealed.

The key consideration was whether the Court, when assessing unfairness, could consider whether the relationship was unfair at a given point rather than the end of the relationship.

Ms Smith’s case

In January 2000 Ms Smith's acquired a credit card from RBS. At the same time Ms Smith also entered into a separate insurance contract with the Direct Line insurance company. This insurance contract was the PPI contract. RBS received commission payments on the PPI policy premiums. Ms Smith terminated the PPI policy in March 2006. The last payment made under the PPI policy was in April 2006. The credit agreement between Ms Smith and RBS was cancelled in 2015.

Mr Burrell’s case

A credit card agreement, together with PPI policy, was entered into in 1998. The PPI policy was cancelled in March 2008. The credit card agreement continued into 2019. A payment by RBS under the FCA scheme was made in 2017 and the claim was issued in August 2019.

The Appeal

The relevant issues for the Court of Appeal were:

• The unfairness of the relationship;
• RBS's submission that the transitional provisions meant that Ms Smith had no cause of action; and,
• RBS's submission that the claim was barred by the Limitation Act.

The Court of Appeal determined that the Court, in assessing the fairness of the relationship between the debtor and the creditor, is entitled to take all relevant matters into account whenever they took place, and that will include a related agreement such as the PPI agreement even if that PPI agreement itself had come to an end before the point in time that the unfairness is being assessed. So, the Court is entitled to assess the fairness of the relationship which came to end at the point it came to an end, and it is appropriate to take into account a related agreement which had ended before that.

The Court of Appeal also determined that transitional provisions make no difference at all to the fairness assessment conducted under s140A.

Lastly, in respect of limitation it was determined that the relationship was unfair in 2015, the claim was not barred by the Limitation Act and that Act did not prevent the Judge from ordering repayment of sums paid many more than 6 years before.

This is an interesting development in the field of PPI law; we look forward to seeing the decision of the Supreme Court.