PRA GROUP (UK) LIMITED
Philip Mantle (instructed by Howell Jones) for the Claimant
Thomas Brennan (instructed by QS Howlett Clarke) for the Defendant
Hearing dates 22nd and 23rd June 2017
Note: page references in this judgment in the form  are to pages in the trial bundle.
1. This is a claim by PRA Group (UKI) Limited (“PRA”) for £13606.20 plus interest, being the balance allegedly outstanding on a running account credit card agreement in the name of the Defendant Mr Nicholas Segal (“Mr Segal”). In trying the case I was assisted by skeleton arguments and bundles of authorities from both counsel, which were supplemented by further written submissions on behalf of Mr Segal which were presented during the trial and by further written submissions from both counsel after the trial. I had the benefit of a trial bundle, which I have read. I have taken all of these documents, and the authorities, in to account.
2. It is common ground that Mr Segal had from about February 2003 onwards a credit card provided by MBNA Europe Bank (“MBNA”) and branded in the name of West Ham United FC. Mr Segal came by the application form for the credit card account when attending a football match at West Ham. He bought a programme and the application form was an insert in the programme. It was of the type which has been described as a gatefold or concertina document. The applicant for an account is able to fill in the required details and then fold and seal the document so that it resembles an envelope and is ready for posting. The document included a pre-paid postage mark.
3. Mr Segal completed the application form on or about 17th February 2003 and then or soon afterwards posted it to MBNA and in due course received the credit card, also by post.
4. PRA’s case is that at that time Mr Segal entered into a running account credit card agreement on terms of which various copies appear in the trial bundle. PRA says that Mr Segal defaulted on his obligations to make repayment and it is PRA’s case that on 3rd December 2012 a default notice pursuant to section 87(1) of the Consumer Credit Act 1974 was served on him. Unless otherwise stated all further references in this judgment to sections are to sections of that Act. The effect of the default notice was that Mr Segal was required to pay arrears of £2107.33 by 22nd December 2012, failing which the credit agreement would be terminated and the whole of the then outstanding balance would fall due. PRA’s case is that after service of the default notice, Mr Segal made three more payments, but did not clear the arrears in full. The account was terminated and Mr Segal was informed of that fact by letter dated 7th February 2013. The balance then stood at £13606.20 and no further payments have been made. Hence, that is the sum which is claimed in this action.
5. PRA brings this action as assignee of the credit agreement, having acquired title to it from Aktiv Kapital Portfolio AS Oslo Zug Branch (“Aktiv Kapital”), which in turn acquired it from MBNA.
6. Mr Segal challenges PRA’s case on various grounds which are disclosed in the Defence. They are:-
(a) He puts PRA to proof of its entitlement to sue as assignee of the credit agreement (“the assignment issue”);
(b) He says that the agreement was improperly executed by reason of non-compliance with section 61, in that the agreement which he signed did not incorporate all of the terms, or any of the prescribed terms. It is common ground that if Mr Segal is correct about this, the agreement is absolutely unenforceable by virtue of section 127(3) of the in the version which applies to this, pre 2007, agreement (“the section 61 issue”);
(c) He says that he was not provided with a copy of the agreement when he signed it, or when the executed agreement was sent to him, contrary to sections 62 and 63 (“the copies issue”);
(d) He alleges that there may have been a breach of section 78, in that, having made a request he has not been provided with a correct copy of the terms which applied at the date termination of the agreement (“the section 78 issue”). This is closely related to the default notice issue, which follows;
(e) He says that no default notice which complied with sections 87 and 88 was served on him. His case is that no notice at all was served on him and that the notice which PRA says was served did not comply with the legislation because it did not identify correctly the terms of which Mr Segal was in breach (“the default notice issue”). Mr Segal contends that the combined effect of the section 78 and default notice issues is that either the default notice (if served at all) was defective, in which case the claim must be dismissed under section 87(1), or the terms identified in the response to his section 78 request as those which applied at termination were not the correct terms, in which case the claim must be dismissed under section 78(6);
(f) He says that the relationship between him and PRA and its predecessors was unfair within the meaning of section 140A. He says that it was unfair because of any one or more of the failures to comply with the 1974 Act, the default charges and bullying by PRA and its predecessors in seeking to recover the debt (“the fairness issues”).
7. At the suggestion of both counsel, I tried the section 61 issue, since it might be determinative of the whole action. I received a witness statement and heard evidence from Mr Glassborow of PRA. His written evidence described the formation of the credit agreement in general terms. The precise circumstances which applied to Mr Segal were of course outside his knowledge. The copy of the original signed agreement which appears at pages [9 and 10] does not contain all of the terms and in particular it does not contain any of the prescribed terms. As summarised above, the agreement was of the gatefold or concertina type, which came in to Mr Segal’s possession when it was enclosed in a programme which he bought when attending a football match at West Ham. Mr Glassborow’s explanation for the absence of some of the terms in the copy at [9 to 10] is that MBNA made an error when the original document was scanned for archive purposes. By mistake some of the terms were obscured by part of the gatefold which had been folded or placed over them. Counsel for Mr Segal in cross examination sought to demonstrate that this could not be correct by reference to the apparently matching tear marks on the edge of the photocopied document.
8. In cross examination Mr Glassborow accepted that his information about the recording process came from a contact at MBNA called Louise Bradshaw. He accepted that he had no first-hand knowledge of the scanning and recording processes at MBNA. He said that Ms Bradshaw had no involvement with those processes now and that he did not know whether she had done in the past. He was asked whether the document was easily legible. He pointed out that the copy at [9 and 10] is smaller than the original whilst that at  is a blown up copy. He accepted that PRA could probably have called a witness from MBNA who had personal knowledge of the processes but said that it had not done so because it would have been disproportionate.
9. I heard evidence from Mr Segal. He accepted that he had signed the document at  after receiving the gatefold in the West Ham programme. He was adamant that the document which he signed comprised the application form only and contained no terms and conditions whatsoever. He accepted that in response to his section 78 request he had subsequently been provided with copies of the terms in A3 format as they appear at [288-289].
10. For PRA it was submitted that there were only three possible explanations. The first is that MBNA sent out the complete gatefold document containing all of the terms and that an error has been made in recording a copy of it. The second is that it sent out a document containing some but not all of the terms (and not including the prescribed terms). The third is that it sent out a document containing no terms at all and the copy has been altered or added to in some way. It was submitted that of these the first is much the most probable.
11. I accepted the submissions of PRA. Mr Segal had given evidence about matters which happened more than fourteen years ago and which at the time probably did not assume for him the importance which they have now. I did not fund him to be a dishonest witness, but I am sure that his recollection of signing a document which contained no terms whatsoever was flawed. That may perhaps also reflect the propensity by which a person may, without dishonesty, come to believe the version of events which beat fits their case. In any event it was not in my judgment realistically possible that MBNA had circulated in bulk, by insertion in football programmes, application forms which contained no terms, or incomplete terms. PRA had produced evidence which showed that MBNA had standard terms which complied with the 1974 Act. It obviously knew of the Act. I found that the terms, in full, were included in the gatefold document which Mr Segal signed.
12. Thus, I resolved the section 61 issue in favour of PRA.
13. I shall summarise the evidence about the assignment issue, the copies issue, the section 78 issue and the default notice issue.
14. Mr Segal returned to the witness box. In his statement he said that when the credit card was sent to him no copy of the terms and conditions was enclosed. He said that if a copy had been sent to him, he would have kept it. In cross examination he was much more adamant about this than he was in the statement. The passage in his statement which dealt with this point began with the words “If I recall correctly”. In cross examination he said “I 100% remember” that there were no terms and conditions with the credit card. He was equally adamant that he had not received a default notice or a termination notice from MBNA at the time when PRA now says that they were sent. The copies in the trial bundle at [24 and 25] were sent to him much later, in November 2013, by Mr Glassborow: see . Mr Segal was also adamant that he had not received the notice of assignment at . He agreed however that the correspondence at pages  and  showed that his solicitor must have found out at some time between September 2015 and February 2016 that the debt had been assigned by Aktiv Kapital to PRA.
15. Mr Glassborow was cross examined. He accepted that his knowledge of MBNA’s activities was second hand. He said that he had asked MBNA for proof of the sending of the second copy of the agreement but had been told that it was not available in writing. He was cross examined at length about the documents which evidence the two assignments. He explained the process by which they operate. In my judgment he was reasonably familiar with those processes. He explained adequately not only how the process works in general, but was able to demonstrate by reference to the data schedules that Mr Segal’s account in particular was amongst those which were assigned.
16. He was cross examined about the default notice at . It is dated 3rd December 2012. It is followed by a termination notice at  dated 7th February 2013. It was pointed out to him and he accepted that both documents contain footers which show that MBNA is regulated by the Financial Conduct Authority. He accepted that the Financial Conduct Authority did not exist in February 2013, so the documents must be re-prints on MBNA’s current writing paper. This is confirmed by the fact that the two letters describe MBNA as MBNA, not MBNA Europe Bank. The change of name occurred in about June 2013: see page . So the documents at [24 and 25] are not originals, or photocopies or archive copies of originals.
Discussion and conclusion: The default notice and section 78 issues
17. In submissions counsel for Mr Segal made trenchant criticism of the evidence about the default notice. He pointed out that the notice refers to breaches of clauses 1 and 8 of the agreement, calling for payment of the minimum sum and of any excess over the credit limit. Clauses 1 and 8 of the terms which were in force at the time of termination [18 to 23] and which were disclosed in response to Mr Segal’s section 78 request deal respectively with the credit limit and the right to cancel. Mr Glassborow had accepted that the default notice identifies the wrong terms. In addition on 16th January 2013, after the date of 22nd December 2012 by which the default notice required payment of a sum in excess of £2000 in order to avoid closure of the account, MBNA sent to Mr Segal a routine monthly statement. On the same day MBNA sent a notice of sums in arrears which specified arrears of only £2533.34. Counsel could have added that as late as June 2013 MBNA was still sending routine correspondence about its change of name  to the holder of an account which had by then not only purportedly been closed, but also assigned.
18. The question for me is whether I am satisfied on a balance of probability, the burden being on PRA, that a default notice was sent to Mr Segal. The evidential position is:-
(a) There is no evidence, direct or indirect, of the creation of the default notice. Thus, in contrast to the position in Gregory v MBNA  EWCA Civ 716, there is no material from which I can infer that, the original document having been created, it would in the ordinary course have been posted;
(b) The copies in the trial bundle can at best be only reprints of an earlier documents, printed on up to date stationery. There is no evidence of the record, or type of record, from which that reprinting was done, There is no copy, however inadequate, of the original default notice;
(c) Mr Segal was clear in evidence that he had not received the default notice. I have found that his recollection of the events surrounding the creation of the account was not correct, but the default notice is alleged to have been sent in 2012, which was much more recently. It would have been an important document which Mr Segal might have been expected to remember;
(d) The default notice refers to terms which were not the terms which are now said to have been current at the time of termination. No explanation has been provided for this discrepancy;
(e) MBNA sent later correspondence which is at least arguably inconsistent with a default notice having been served and the account closed.
19. In all the circumstances and looking at the evidence as a whole I find on the balance of probability that no default notice was sent. I cannot be satisfied that the alleged default notice, even allowing for the use of up to date stationery, represents a true copy of anything which existed at its purported date of 3rd December 2012. About its provenance the evidence is silent. I add that for the same reasons I find on a balance of probability that the notice of termination  was not sent either.
20. In the light of that conclusion, I can deal with the section 78 issue shortly. In response to his request, Mr Segal was provided with copies of the credit agreement, the original terms and conditions [9-14] and those which applied at the date of supposed termination [18-23]. He has been provided with account statements on a periodic basis. The last statement before the commencement of proceedings was sent on 7th January 2014 and the most recent on 29th March 2017. Insofar as the copies are reconstituted, there can be no objection to this: the requirement is that copies be true, rather than exact: see Carey v HSBC  EWHC 3417. I have dealt above with the inconsistency between the terms which applied at the supposed date of termination as set out in response to Mr Segal’s request and those which were mentioned in the default notice. Since I have found that the default notice was not sent and since I have real doubts about its provenance, I find that the terms and conditions which appear at [18 to 23] were indeed those which applied at the supposed date of termination. It follows that PRA has complied with its obligations under section 78.
21. The legislative consequences of a finding that no default notice was sent this finding are not as clear as might be desired. Section 87 provides so far as relevant:-
“87.— Need for default notice.
(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default notice”) is necessary before the creditor or owner can become entitled, by reason of any breach by the debtor or hirer of a regulated agreement,—
(a) to terminate the agreement, or
(b) to demand earlier payment of any sum, or
(c) to recover possession of any goods or land, or
(d) to treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred, or
to enforce any security.
22. Counsel for Mr Segal submitted that if no default notice was sent the proper course is to dismiss the claim because MBNA and PRA as its successor were not entitled to terminate the agreement or to demand earlier payment. Counsel for PRA submitted that to do so would be wrong. He referred to section 170(1):-
“170.— No further sanctions for breach of Act.
(1) A breach of any requirement made (otherwise than by any court) by or under this Act shall incur no civil or criminal sanction as being such a breach, except to the extent (if any) expressly provided by or under this Act or by or under the Financial Services and Markets Act 2000 by virtue of an order made under section 107 of the Financial Services Act 2012.
Counsel submitted that to dismiss the claim would be to subject PRA to a civil sanction in contravention of that section. He drew my attention to the decision of Rankine v American Express  CTLC 195, approved in McGuffick v Royal Bank of Scotland  Bus LR 1108. In Rankine, the Court said-
“In the Tesco case, where they are seeking enforcement, section 78(6) of the Act does not have the effect contended for by the Rankines. First, the prohibition is against a creditor “under an agreement”. The agreement was at an end. Therefore there is no reason why there cannot be enforcement. Secondly, the word “enforce” is not descriptive of the commencement of proceedings. Bringing proceedings during a time when the agreement has been brought to an end is only a step taken with a view to enforcement. It is not actually enforcement. Sufficient information has been provided during the proceedings to comply in any event. Thirdly, the proceedings cannot be said to be a nullity or otherwise affected. The appropriate step to be taken by the Rankines would have been to seek a stay of the proceedings pending provision of the information. A cause of action had arisen when the proceedings were commenced”.
Later in the judgment, the Court applied the same principle to an alleged failure to comply with the requirement to serve a compliant default notice. Counsel for PRA submits that the proper course for Mr Segal in this case would have been to apply for an anti-suit injunction or a stay and that he has not done so. That reflects the factual position but is of little assistance in relation to the proper course for this Court now. Mr Segal’s failure to seek a stay of this action (which application would of course have been heavily contested) does not negate the effect of section 87 or confer on PRA a right of enforcement which, ex hypothesi, it does not have. PRA has made no attempt to cure the failure to serve a default notice. The question for me is whether as matters stand in the light of the finding which I have made, MBNA was, and PRA is, entitled to treat the agreement as terminated and to recover the entire outstanding balance. The answer to that question is, by virtue of section 87, “no”. I shall therefore dismiss the action. I am not persuaded that by doing so I am imposing a civil penalty on PRA. Rather, PRA has by this action sought to exercise a right of enforcement which it does not have.
23. Strictly speaking, I do not in those circumstances need to address other aspects of the case but since I heard evidence about them and they were fully argued, I shall do so.
The copies issue
24. By Section 62:-
62.— Duty to supply copy of unexecuted agreement: excluded agreements
(1) If in the case of a regulated agreement which is an excluded agreement the unexecuted agreement is presented personally to the debtor or hirer for his signature, but on the occasion when he signs it the document does not become an executed agreement, a copy of it, and of any other document referred to in it, must be there and then delivered to him.
(2) If the unexecuted agreement is sent to the debtor or hirer for his signature, a copy of it, and of any other document referred to in it, must be sent to him at the same time.
(3) A regulated agreement which is an excluded agreement is not properly executed if the requirements of this section are not observed.
25. By section 63:-
63.— Duty to supply copy of executed agreement: excluded agreements.
(2) A copy of the executed agreement, and of any other document referred to in it, must be given to the debtor or hirer within the seven days following the making of the agreement unless—
(a) subsection (1) applies, or
(b) the unexecuted agreement was sent to the debtor or hirer for his signature and, on the occasion of his signing it, the document became an executed agreement.
(3) In the case of a cancellable agreement, a copy under subsection (2) must be sent by an appropriate method.
(4) In the case of a credit-token agreement, a copy under subsection (2) need not be given within the seven days following the making of the agreement if it is given before or at the time when the credit-token is given to the debtor.
26. I have already dealt under the section 61 issue with the question whether Mr Segal signed a copy of the agreement containing all of its terms. I find that not only did he do so, but he was also provided with a second copy to keep. I make this finding for much the same reasons. Mr Segal was recalling matters which were more than fourteen years old. It is inherently improbable that MBNA would prepare documents which failed in such obvious and important respects to comply with the Act. The terms and conditions state in the top left hand corner that a second copy is provided for the applicant to keep . It is unlikely that this information would appear f it was not correct. Finally, although it is a small point, Mr Segal, by signing the application form, acknowledged that he had been provided with a copy: see the passage in bold type above the signature box.
27. I find also that a further copy was sent with the credit card in accordance with section 63. There is, obviously, no doubt that the credit card was sent to and received by Mr Segal. In the ordinary course of things it is to be expected that a copy of the terms would have been sent with it. Since, in contrast the position concerning the default notice, there is evidence that the credit card was created and posted I am prepared to, and do, draw the inference that the required copy of the agreement was sent with it as well.
The assignment issue
28. The agreement between MBNA and Aktiv Kapital for the sale of receivables, being the principal agreement by which the rights under Mr Segals’ account were sold to Akiv Kapital appears at . The related assignment is at , supported by an extract from the data transfer records which shows Mr Segal’s account. The sale agreement between Aktiv Kapital and PRA appears at . Counsel for Mr Segal relied upon the absence of a signature on behalf of MBNA on the copy of the earlier agreement at . After the first day of the trial I was asked on behalf of PRA to admit a copy of the signature page which included the missing signature. Despite objection from counsel for Mr Segal I saw no injustice in doing so and permitted the late admission of this document. Various technical points are taken in the Defence as to the validity of the assignments but these were not pressed strongly in closing submissions. I am satisfied that both assignments were valid legal assignments, made in writing under the hand of the respective assignors and made absolutely rather than by way of charge only: see section 136 of the Law of Property Act 1925. As counsel for PRA pointed out in his skeleton argument, there is nothing in either of the deeds of assignment which is consistent with the assignment being other than absolute.
29. I am satisfied also that Mr Segal was given written notice of the assignments. No formality is required beyond the fact that the notice is given in writing and that it brings to the attention of the debtor that the debt has been assigned so that the debtor must pay the assignee rather than the original creditor: see Lynn Developments Limited v Pelias Construction Company Limited  1 QB 607. The notices of assignment at  and  are more than adequate to do that. I am satisfied also that Mr Segal did receive both notices. On 10th April 2013 Mr Segal replied to the notice of assignment to Aktiv Kapital . As I have set out above, although as late as September 2015 Mr Segal’s solicitor corresponded with the opposing solicitor on the footing that the opposing party was Aktiv Kapital, by February 2016 he or she must have known of the assignment to PRA, because the correspondence heading reflects that change. If no notice of assignment had been given, Mr Segal’s solicitor would surely have taken the point.
30. I am satisfied therefore that Mr Segal’s case, insofar as it relies upon any alleged defect in the assignment process, would fail.
31. I turn now to Mr Segal’s case under what may be termed the broad heading of fairness. By section 140A:-
140A Unfair relationships between creditors and debtors
(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following–
(a) any of the terms of the agreement or of any related agreement;
(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
(c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).
(2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).
32. Counsel for Mr Segal terms submitted in summary:-
(a) The default charges of £12 per month which were levied arose from terms of the agreement which were unfair by virtue of the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”), as in force at the relevant time. It was also pleaded that these charges operated as an unlawful penalty but this argument was not pursued in the light of the recent decision of Cavendish Square Holding BV v El Makdessi and Parking Eye Ltd v Beavis  3 WLR 1373;
(b) The relationship between PRA and its predecessors and Mr Segal was also unfair because of the manner in which they sought to recover the debt;
(c) Cumulatively, the relationship was unfair within the meaning of section 140A.
33. In support of the UTCCR submission, counsel for Mr Segal drew heavily on the OFT report of April 2006 “Calculating fair default charges in credit card contracts”. That called for a threshold of intervention by the OFT in cases where credit card default charges exceeded £12 per month. The report however stated that it should not be presumed that a default fee is fair just because it is below the threshold. Counsel submitted that PRA had called no evidence to show that the charge of £12 per month reflected the actual administration costs caused by late payment, particularly as interest which is levied on the sums which are paid late during the period of default should be taken in to account. Further, the repeated levying of late payment charges creates a spiral of debt from which a consumer, particularly an impecunious consumer, may find it difficult or impossible to escape. Overall it was submitted that the imposition of late payment charges contravened the requirement of good faith in regulation 5 of UTCCR. Counsel submitted that it would be necessary, if the case reached this stage, for it to be adjourned to obtain a full record of all monthly statements so that the effect of late payment charges on Mr Segal could be ascertained.
34. To all this, counsel for PRA had a simple answer. In Office of Fair Trading v Abbey National and Others  1 AC 696, the Supreme Court held that default charges levied by banks against their customers fell within the scope of regulation 6(2)(b) of UTCCR, by which consideration of the fairness of a term does not extend to the adequacy of the price of the goods or services rendered. It was submitted that there is no distinction between the charges in that case, which was concerned with unauthorised bank overdraft charges, and the default charges in this case.
35. In a written submission delivered on the second day of the trial counsel for Mr Segal made the following points:-
(a) The Abbey National decision was concerned with overdraft charges, not credit card default charges. This is a fundamental distinction because the Abbey National decision was premised on the basis that exceeding an agreed overdraft limit or becoming overdrawn without authority is not a breach of contract, but an informal request for an overdraft, whereas failing to make a minimum payment under a credit card agreement is necessarily a breach;
(b) Further, an important part of the rationale of the Abbey National decision was that the unauthorised overdraft charges formed a significant part of the revenue stream of the banks which was necessary to provide the overall package of services. There is no evidence that that is the position in this case;
(c) Therefore, it was submitted, credit card charges are not part of the overall package of services but are default charges which are subject to mandatory assessment by the court in this claim: see the decision of the ECJ in Banco Espanol de Credito SA v Camin (C 618/10);
(d) The Abbey National decision is inconsistent with and impliedly over-ruled by the ECJ decision of Arpad Kasler v OTP Jelzalogbank Zrt. In this decision the ECJ ruled that terms falling within the expression of “the main subject matter of the contract must be understood to be those which lay down the essential obligations of the contract and as such characterise it. They are to be distinguished from terms which are ancillary to those which define the essence of the contract. This distinction had been accepted by the Court of Appeal in the Abbey National litigation, but rejected by the Supreme Court. Counsel submitted that the Supreme Court had erred in law. It was submitted that Kasler demonstrates that the Supreme Court’s decision in Abbey National that the point was acte clair was wrong, not only because Kasler was decided the other way but also because four judges of the lower courts had reached the opposite conclusion;
(e) In Bogdan Matei & Ioana Ofelia Matei v SC Volksbank Romania SA, the ECJ unequivocally confirmed the distinction between core and ancillary terms. It was submitted that the ECJ had thereby rejected the Supreme Court’s view that the fact that the charges in Abbey National were contingent and that the majority of customers did not pay them was irrelevant to the question whether the term imposing them was a core term. If the relevant term and the relevant charge were contingent and the majority of consumers did not pay them then, as a matter of logic, the term could not be a core term. In Matei the ECJ also ruled that the fact that the charge with which that case was concerned formed an important part of the revenue stream which enabled the lender to provide the service was wholly irrelevant to the question whether the term imposing them was a core term or an ancillary term. This is important because the Supreme Court in Abbey National had accepted that the terms which permitted the levying of unauthorised overdraft charges were essential terms because the revenue derived from them was necessary to enable the banks profitably to provide current account services for customers who stayed in credit without making a further charge. In the light of Matei, it was submitted, the Supreme Court should not even have been considering those factors;
(f) In Ernst Georg Radlinger & Helena Radlingerova v Finway SA the ECJ ruled that it is necessary to consider the cumulative effect of terms which may be unfair, in order to determine whether they are unfair. It was submitted that this is of particular importance in this case, in which multiple default charges were applied on a monthly basis. In the light of Finway the cumulative charges in this case are clearly unfair. It was submitted that this view is supported by the OFT report and by the decision in Matei which emphasised that default charges are levied, but without the provision of any additional service in consideration for them;
(g) In the light of these authorities it was submitted that there can be no assessment of the adequacy of what is provided in exchange for the default charges. They are intrinsically unfair.
36. In written submissions in response also delivered after the hearing counsel for PRA submitted that the fact that a term constituted a default term did not necessarily mean that it could not form part of the price or remuneration for the service provided. Thus, for example, a charge levied for exceeding a credit limit is nothing more than an agreement to pay a particular payment on the happening of a particular event.
37. It was also submitted that it is not for this Court to determine that the Abbey National decision was wrongly decided and elevate the later ECJ decisions to a position of primacy over it.
38. Nevertheless counsel for PRA recognised that in the absence of evidence of the importance of the revenue stream which is derived from the default charges in the provision of the overall service (such evidence having been present in Abbey National), PRA would face considerable difficulty in establishing that clause 13, which imposed the default charges, fell within the regulation 6(2) exemption. Accordingly it was recognised that the Court was unlikely on the evidence available in this case to conclude that the exemption applied.
39. It was submitted that in the event that the regulation 6(2) exemption does not apply, the Abbey National decision ceases to be relevant. It did not follow from that state of affairs, however, that the default term was automatically unfair. Tus, in Director General of Fair Trading v First National Bank  1 AC 481, the House of Lords had held that a term relating to post judgment interest in a consumer credit agreement did not fall within the corresponding exemption in the regulations which then applied, but was fair in all the circumstances. It does not follow that a default provision cannot relate to the adequacy of the price or remuneration as against the goods or services supplied: see Bairstow Eves London v Smith  EWHC 263. The Abbey National decision does not draw any such absolute conclusion. PRA re-iterated its submission that the term was fair and reflected PRA’s legitimate interest in the performance of the contract. Reliance was placed on Cavendish Square Holdings v Makdessi  3 WLR 1373 in this respect.
40. Had it been necessary to do so I would have reached the following conclusions on the question of fairness under UTCCR:-
(a) The Abbey National decision is not of direct application, since it concerns unauthorised bank overdraft charges, not default charges in running account credit agreements. Default charges are without doubt the consequence of breach of contract. Unauthorised overdraft charges, as analysed in the Abbey National decision, result from the provision of services pursuant to an implied request. I do not consider that Abbey National is authority for the view that default charges necessarily fall within the regulation 6(2) exemption and in the circumstances of this case I accept PRA’s counsel’s responsible and proper recognition that the charges here almost certainly do not;
(b) The burden of showing that the term is fair is on PRA;
(c) PRA has called no evidence on that point. I am unable to tell whether, for example, the charges might be fair in all the circumstances as forming a proportionate part of the revenue stream for providing the overall package of services under the account, or to secure proper performance of the contract;
(d) That being so PRA has not discharged the burden of showing that the default charges are fair.
41. In view of my decision about the default notice issue, it is not necessary for me to decide what relief would follow from a conclusion that the default charges have not been shown to be fair, or what directions would need to be given for the determination of that issue. I observe however that even a cursory examination of the effect of default charges on Mr Segal’s debit balance, as evidenced for example in the statement log at  shows that it was substantial.
42. That leaves the question of whether The conduct of PRA and its predecessors in seeking to enforce the agreement also contributed to the unfairness of their relationship within the section 140A regime. Mr Segal in his witness statement records that he was subjected to telephone calls from MBNA, and then by Aktiv Kapital, made every other day, pressing him for payment. He felt as if they were “trying to make me mad”. He was also sent text messages and, later, was served with a statutory demand by PRA. He described MBNA’s behaviour as “bully boy tactics”. He suffered stress, migraine headaches, had time off work and lost business. Cross examined, he accepted that he had not kept any log or other record of the telephone calls and that he had produced no medical evidence.
43. Mr Glassborow was unable to shed much light on the telephone calls. He said that PRA does not have access to MBNA’s telephone records. He said that Mr Segal’s account did not appear on PRA’s automated dialling system from which I draw the inference that it is PRA’s case that it at least did not bombard him with telephone calls. That of course tells us nothing about its predecessors.
44. For PRA it was pointed out that at no time did Mr Segal complain about the treatment which he now describes as bullying, despite entering in to extensive correspondence. It was submitted that for a creditor to contact a debtor is not in itself unfair and that where a substantial sum is owed it is not surprising that a creditor presses for payment or that the debtor does not welcome such pressure.
45. In my judgment, although I accept Mr Segal’s evidence that the telephone calls and text messages caused him stress and may indeed have led to a resumption of his migraine headaches, I do not consider that his evidence shows that the conduct of MBNA or Aktiv Kapital or PRA in exercising its rights under the agreement was in itself unfair. Being in debt is stressful and even legitimate pressure to pay is likely to add to the stress. I have already found the relationship to have been unfair by reference to the default payment terms, but I do not consider that any pressure or conduct generally by PRA and its predecessors has been shown to have further contributed to that unfairness.
46. For the reasons set out at paragraphs 17 to 23 above, the claim is dismissed. It is not necessary for anyone to attend the handing down of this judgment. If the parties are unable to agree the costs consequences of this judgment, I propose to hear any argument about costs by way of a telephone hearing unless either party asks for an oral hearing.