Heres is the Judgment from the Swift case i referred to in my last blog entry.
IN THE COUNTY COURT AT BOW Case No: 4PB02756
96 Romford Road
13th April 2016
DISTRICT JUDGE BELL
SWIFT ADVANCES PLC Claimant
LAZELL ANITA DALEY Defendant
For the Claimant: Mr Thomas Samuels of Counsel
For the Defendant: Mr Thomas Brennan of Counsel
Transcript provided by:
Posib Ltd, St Mary’s Chambers, 87 High Street, Mold, Flintshire, CH7 1BQ
Official Transcribers to Her Majesty’s Courts and Tribunals Service
Tel: 01352 757273
JUDGMENT 13th April 2016
DISTRICT JUDGE BELL:
- This is my judgment in the case of Swift Advances PLC and Ms Daley, and it concerns two applications that have been made by Ms Daley.
- The first application is dated 23rd February 2015, which she issued to determine the redemption figure on the mortgage following a Possession Order I made on 20th January 2015.
- The second application is dated 27th May 2015, in which Ms Daley raised a number of issues concerning the rate increases imposed on the mortgage, charges, unfair terms and an unfair relationship arising out of the mortgage agreement under section 140A of the Consumer Credit Act 1974.
- On 11th March 2016, I heard evidence from Mr White (the Risk Manager at the Claimant’s) and Ms Daley, as well as hearing submissions from Counsel for the parties.
- I have also read the trial bundle and spent some time going through the Swift log of communications and actions on the account and details of the payments made and credited to the account.
- By way of background, the parties entered into an unregulated fixed sum loan agreement on 3rd March 2006. This was secured by a second charge on Ms Daley’s property, 27 Willow Close, Buckhurst Hill. The advance was for £175,190 repayable over 240 months at initial interest rate of 1.02% per calendar month or 12.24% APR.
- From the outset, issues arose with payments on the account by Ms Daley. The initial monthly repayment instalment was £1,958.39. There followed between August 2006 and July 2007 five rate increases, so that the monthly repayment increased to £2,126.55.
- Due to the said arrears on the account the Claimant imposed various charges in line with its tariff of charges and the Claimant commenced a possession action. The first Possession Order was made on 23th April 2008. Following that, substantial payments were made by the Defendant to the account which cleared the arrears and put Ms Daley in credit.
- The Claimant states that further arrears then arose and the second possession action was commenced. I made the Possession Order on 20th January 2015 but made no determination of the money judgment, stating that either party could apply to Court if the sum could not be agreed. That is what Ms Daley has done by way of her first application.
Payments to the Account
- Before I address the various issues in this case, I need to make some general comments regarding the payments that were made by Ms Daley and credited by Swift to the mortgage account.
- The bundle (from page 561) contains a print-out of sums on the mortgage account produced by Swift, including credits, bounced payments and a credit arrears balance.
- Ms Daley produced a spreadsheet (see page 311 of the bundle) setting out payments she said had been made. She did not produce any bank statements to support the payments that she contended were contained on the spreadsheet. Ms Daley has said that the Swift records do not record payments that she has made. I have spent time comparing the two. It is unfortunate that Ms Daley’s spreadsheet contains a number of mathematical errors. Figures shown at the end of a column as the total do not always match with the numbers individually set out for that year. On a number of occasions she has not set out payments that Swift has credited to her account, and where she has stated she has made additional payments, there is no evidence of that.
- Going through the figures by calendar year:
- 2006 – Ms Daley failed to record a payment of £1,958.39 made on 15th June 2006 and credited to the account by the Claimant. This makes the total for that year £17,862.80, not £15,904.41 as Ms Daley records;
- 2007 – Ms Daley included a payment of £250 on 10th December, but there is no evidence of her having made that payment and it is not credited on the account. I, therefore, make the total £14,264.26 as shown in the Swift statement;
- 2008 – the figures that Ms Daley has produced and that of Swift tally;
- 2009 – the sums in the spreadsheet Ms Daley has produced do not add up to the figure she gives. They total £37,400 and not £39,400. However, Swift have record of a payment of £2,000 on 4th November which is not in Ms Daley’s spreadsheet. The total paid is £39,400;
- 2010 – three payments of £10,000 were made by Ms Daley. Two are clearly shown in the Swift statement of account as credited to the account. The third payment of £10,000 was credited to the account by Swift and then removed, and a figure of £8,553 was credited. Having reviewed the account log, it clearly shows correspondence between the parties and that a sum of £1,447 was deducted from the third payment of £10,000 as an early repayment charge. Ms Daley is wrong to claim that she made three payments of £10,000 and an additional payment of £8,553. She has produced no evidence to support an additional payment of £8,553 (over and above the £30,000) rather than the explanation provided in the log. The total amount paid in that year and credited to the account is £42,313;
- 2011 – Ms Daley’s figures total £9,950, but she has missed a payment of £800 made in August of that year which Swift have credited and the total is therefore £10,750;
- 2012 – Ms Daley’s figures show a payment of £600 in May. In fact, the account was credited with a sum of £500 and I presume that this is a typographical error by Ms Daley. The total sum for that year is £6,300;
- 2013 – Ms Daley’s figures on her spreadsheet add up only to £13,824.12. She has failed to include a payment of £700 made in August which Swift have credited to the account and which brings the figure up to the £14,524.12 (which is the figure she showed on her spreadsheet);
- 2014 – Ms Daley listed on 3rd November a payment of £700. In fact the account was credited with £800 on 31st October (not £700) and therefore the total is £8,100;
- 2015 – Ms Daley’s figures in her spreadsheet end in April 2015. Taking the payments that Swift have on their log, the total paid in that year was £15,040;
- 2016 – The payments up to 3rd March of this year were £1,000 based on the Swift figures, Ms Daley having produced no detail in her spreadsheet for that year.
- The figure that Ms Daley had before any corrections, and adding in the figures for the 2015 and 2016 years, total £217,945.77. With corrections to the amounts paid and credited, the actual payments were £213,154.16 as shown on the Swift statement. This is the figure I accept as the sums paid and credited, Ms Daley having produced no evidence to support any additional sums. I will come back to the figures in due course.
- The issues I need to decide are:
- whether the Claimant validly varied the interest rate payable;
- whether the interest rate variations were unfair terms under the Unfair Terms and Consumer Contract Regulations 1999;
- whether the fees and charges in the Tariff were incorporated into the mortgage agreement;
- whether the fees and charges in the tariff and applied are unfair under the regulations;
- whether there is an unfair relationship by reason of excessive contact or harassment of the Defendant and/or issues concerning interest variation and charges and management of the account;
- if so, whether the Defendant is entitled to all or some of the relief claimed; and finally
- what the correct redemption figure should be.
Issue (i) Whether the Claimant validly varied the interest rate payable
- The agreement stated:
“…we may change the rate of interest by giving you notice under clause J over the page. We will only change the rate of interest if the cost of our funds changes.”
Clause J states:
“We have the power to change the rate of interest we charge under this agreement to reflect a change in the cost of our funds. We may use that power by giving you at least fourteen days’ notice in writing by first class post. The change will apply from the date shown in the notice which will also tell you why the cost of our funds has changed”
Ms Daley accepted that she had read the agreement at the time of entering into the mortgage.
- By letters dated 28th August 2006, 23rd November 2006, 23rd January 2007, 21st May 2007 and 13th July 2007, Swift gave notice of rate increases, each effective fifteen days after the date of the letter and the change was to be applied in the following monthly instalment. The first three letters refer to “the last increase in the bank base rate”, as the cause of the increase, and the last two refer to “a general increase in interest rates in the market recently and this, together with the increase in our funding” as the cause of the change.
- The Defendant’s position is that none of the letters were received the day after posting and therefore insufficient notice was given and as a result there was no valid increase. Ms Daley has produced no evidence as to when the letters were received and in response to a question in cross-examination said:
“I’d have to go through all the envelopes to see when they were received.”
- In his skeleton argument the Defendant’s counsel relied on CPR 6.26 and the deemed date of service. The CPR has no relevance to service of a contractual variation notice.
- In oral closing, Ms Daley’s Counsel sought to rely on the Court of Appeal decision in Brandon v American Express Services Europe Ltd  EWCA Civ 1187 as authority for there being no presumption of next-day delivery for first class post. It must be remembered that in Brandon the court was concerned with an application for summary judgment by the Claimant and Brandon had to have no real prospect of successfully defending. What Gross LJ stated was:
“I cannot agree that it should be presumed that the Default Notice would have been served less than two days after being posted; on any view, I would be unable to make any such assumption in Amex’s favour for the purposes of Part 24 judgment.”
- But I am not concerned with a summary judgment application. What I am concerned with is Ms Daley’s assertion that she did not receive any or all of the letters the next day. She has not produced any evidence to support her assertion of when they were received. Such information, of course, she would have, as she admitted, but the exercise of seeing on which days she says the letters were received does not appear to have been carried out. I note further that she did not raise any issue with such purported lack of notice at the time.
- First class delivery is of course sold by the Post Office as a next day delivery service, and while that might not lead to an irrebuttable presumption, in the context I am concerned with it was for Ms Daley to prove her case on this aspect, and she has not done so.
- In any event, even had I accepted that fourteen days’ notice had not been given, it would not, in my judgment, have led to the Notices being of no effect. These are not statutory Notices as in Brandon. The failure to give the notice, if that were the case, would only sound in damages in respect of interest charged before fourteen days’ notice had been given.
Issue (ii) Is the increase rate provision in the agreement an unfair term under the Regulations?
- As is clear from the Supreme Court decision in the Office of Fair Trading v Abbey National Plc and Others  EWCA Civ 116, it is not open to the Court to assess the fairness of the actual interest rate charged, neither party arguing that this is a Regulation 6(2) case. It is, however, open to a court to assess the fairness of a term that sets a mechanism for changing that rate. I have already referred to the applicable provisions from the agreement. In essence, Swift can vary the provision if the costs of their borrowing changes, on giving fourteen days’ notice.
- As this contractual term was not individually negotiated, Regulation 5(1) applies:
“A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”
- Regulations 6(1) states:
“Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.”
- Schedule 2 of the Regulations contains an indicative and non-exhaustive list of terms which may be regarded as unfair. The Defendant relies on paragraph 1(j), a term which have the object or effect of–
“…enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract.”
- And also paragraph 2(b) which states in respect of 1(j):
“[It] is without hindrance to terms under which a supplier of financial services reserves the right to alter the rate of interest payable by the consumer or due to the latter, or the amount of other charges for financial services without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof at the earliest opportunity and that the latter are free to dissolve the contract immediately.”
- It is not, as the Defendant’s counsel states, “possible to vary the rate for any reason Swift sees fit”. Increases must be linked to the cost of borrowing. Mr White’s statements address Swift’s funding position. As he stated, this mortgage was not a tracker loan or linked to base rate fluctuations, therefore there was no automatic rate changes linked to movements in the Bank of England rate or LIBOR or other bank lending rates. He went on to explain that Swift’s costs of borrowing is not only influenced by changes in market interest rates, but also the cost of borrowing form other banks and costs of holding its own capital and liquidity. As a non-conforming lender Mr White explained Swift lends to borrowers who would not be able to obtain loans from high street lenders. Higher interest charges are imposed to reflect the risk that the lender is taking on in respect of such borrowers.
- He further stated that the clause had been exercised due to the cost of funds changing and that the Defendant had the right to redeem the mortgage.
- Ms Daley’s Counsel’s position is that the clause has been used one-sidedly to increase the debt which she could not pay, resulting in charges and arrears to the detriment of the customer. It is further stated that the interest rates never came down.
- The Defendant’s counsel drew my attention to the decision of District Judge Backhouse in First Plus v Murphy and Dye which concerned a clause that entitled the mortgage company to vary “to reflect a change which has occurred, or which we reasonably expect to occur, in interest rates generally or to ensure that our business is carried on prudently, efficiently and competitively”. I have read the decision, which of course is not binding on me. I note that the clause in that case is very different from the one which I am concerned with and therefore the case is of limited assistance.
- I have also been referred to the European Court of Justice cases in RWEVertrieb AG v Verbraucherzentrale Nordrhein-Westfalen eV and the case of Keisler v OPT, which refer to the need that the contract is set out in a transparent fashion, the reason and method for a variation so a consumer can see the basis for the changes and the right to terminate.
- My attention has also been drawn to documents disclosed by the Office of Fair Trading (OFT), who considered Swift’s terms in the course of an investigation concluding in 2011. In an untitled document disclosed by the OFT it refers to a clause which it states“We may change our rate of interest by giving notice”. The OFT commented that this may be open to abuse, to change a rate which suits its own commercial interests, and may be open to challenge under the regulations. However, in the final determination issued by the OFT on 17th June 2011, the OFT made no comment about the rate variation clause.
- Applying Regulations 5 and 6 to the facts, I accept that there are reasons given for when a variation can occur in the rate in clause J. A variation can only occur where there has been an increase in the costs of Swift’s funding. It only relates to changes that have occurred and not to prospective changes, unlike the First Plus case, and I do not accept the submission that it can be used for any reason Swift sees fit.
- It is, of course, wider than changes which are solely linked to Bank of England or LIBOR change and this seems to be the heart of the Defendant’s attack. But, this was not a tracker mortgage, as is clear from the agreement; it was a mortgage from a non-conforming or sub-prime lender, where as Mr White sets out funding issues are very different from high street lenders.
- I do not consider that it creates the imbalance alleged. If the cost of funding for Swift increases, then they are entitled to pass that cost on to customers. In each case, notice is given referring to increasing rates either due to the Bank of England or interest rates in the market generally. It would be possible for a customer to foresee, in the context of a non-conforming lender, the increases in either base rate or overall lending rates in the market would impact on mortgage lending rates. It is a pass through of these charges.
- None of us can foresee exactly when banks will actually change their rates, but clearly such matters are of general knowledge as to Bank of England rates and general market rates reported in the press, and such the likelihood that borrowings of companies such as Swift will be impacted.
- Swift is further criticised in that a borrower has said that they cannot terminate in the notice period provided. No indication is provided by the Defence what would be a sufficient time. It is accepted that termination is available, which is what is required.
- In conclusion, a valid reason is set out for when the rate can be changed. In my judgment, that clause does not create a significant imbalance in the parties’ rights and obligations to the detriment of the consumer, and in reaching my conclusion I note that the OFT, despite considering the clause, has taken no action and it was not referred to in its final determination in 2011.
Issue (iii) Were the tariff charges incorporated into the agreement?
- The Defendant argues that the tariff charges have not been incorporated into the mortgage agreement and cannot be relied on as contractual provisions.
- At various sections throughout the mortgage agreement ((d), (f), (l), (n)(3), (p) and (t)) reference is made to the right of Swift to charge costs in respect of certain specified defaults by a borrower. Clause N states:
“You will be sent a notice of any costs, expenses and charges you might pay under clauses (d), (f), (l), (n)(3), (p) and (t). We have the right to amend these costs and expenses to reflect any change in costs incurred by in carrying out work.”
- The Defendant argues that the tariff charges are not binding, they are not referred to in the agreement and there is no evidence that they were provided to the Defendant. The Claimant states that the tariff was provided. Mr White gave evidence of Swift’s procedures and referred to the reference X9 in the log for the account, which records the documents created and sent to the Defendant, including the tariff of charges. While I accept that Mr White cannot personally say whether the tariff was put in the envelope, the log is a record of the procedure applied by Swift on the creation of documents.
- I note that Ms Daley did note raise at the time, by reference to charges, that there had been a failure to provide her with the tariff. I conclude that, on the balance of probabilities, the tariff had been provided at the outset.
- The Claimant states that the entitlement to charge reasonable costs arises under the agreement itself and therefore there is no need to incorporate the tariff. The only issue arises whether the charges as specified in the tariff are unreasonable.
- In my judgment, the tariff was referred to in the agreements as Notice of Costs, a separate document setting out charges and a mechanism for changing those charges over time. It was provided to the Defendant and the tariff was incorporated by nto the agreement.
Issue (iv) Are the tariff charges unfair under the regulations?
- The Defendant states that the charges are disproportionate and contrary to paragraph 1(e) of Schedule 2 to the regulations, which includes a term which may be considered unfair:
“…requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation”
The Defendant says the fact that they are disproportionate is obvious from the total and incidents of charging that took place, saying that the total charges amount to £10,860.58.
- The Defendant’s Counsel made clear that the charges attacked are those that were incurred before the tariff was changed by Swift in November 2009 during the OFT and Financial Services Authority (FSA) inquiries into the charges, and following that change a monthly fee was introduced when a borrower was in arrears.
- Mr White accepted that both Swift Advances (who provided unregulated loans and were subject to OFT review) and Swift First (who provided regulated loans and were subject to FSA review) used the same tariff of charges.
- While the OFT and FSA have different criteria in considering the position, they made a number of comments about the charges which are pertinent, as follows.
- The OFT stated that:
“Swift Advances tariff of charges is elaborate, and so detailed, to intimidate all but the most desperate of borrowers. Some of these were highlighted by the TSD. The most bizarre of these charges includes those for phone calls and letters sent to them by the debtor (other than in connection with arrears or redemption), and for calls and letters sent to the Company by others on the debtor’s behalf. The cumulative impact of some of these multiple and bizarre charges are clearly bound to put the debtor at a disadvantage.”
- In its final determination, of course issued after the changes to the tariff, the OFT made clear that Swift needed to be transparent about their charges and when they were to apply.
- The FSA fined the Claimant’s sister company and required it to carry out a customer redress programme for customers who were charged certain arrears fees and charges which were excessive in that that they did not reflect a reasonable estimate of administrating an account in arrears. At paragraph 4.13 of its final notice, the FSA addressed excessive fees and charges.
- Under the heading “Servicing Charges” it referred to:
(i) arrears management: monthly fee applied to a customer in arrears where no arrangement to pay was in place;
(ii) Default Notice: default fee applied when a customer’s account fell into arrears (i.e. two monthly payments missed); and
(iii) unpaid mortgage payment fees applied when a cheque, direct debit or standing order was not honoured by the customer’s bank.
- Under the heading “Litigation Fees”, it referred to:
- accepting instructions (fee applied for Swift to instruct solicitors);
- issuing proceedings (fee applied by Swift for it to issue proceedings);
- taking possession (fee applied by Swift when it repossessed a customer’s property); and lastly
- every three months in legal (fee applied for every three months for monitoring a customer’s account while it remained in legal care).
- While the FSA report related to Swift First, Mr White made no assertion or provided no evidence that Swift Advances had any different manner of calculating its own underlying charges to justify the amounts in that charge.
- The FSA concluded that those charges were excessive. Following its inquiry it held that they did not reflect a reasonable estimate of the cost of that work.
- I have reviewed the tariff in this case and read Mr White’s statement of 8th April 2015, where at paragraph 24 he addressed the charges added to Ms Daley’s account in the period 2006 to 2009. He set out in detail what those charges were and those in my judgment mirror the charges that fall under the heading of “Servicing Fees” and “Litigation Fees” and were criticised by the FSA as being excessive in that that they did not reflect a reasonable estimate of administrating an account in arrears.
- Disregarding the sums that Swift has already refunded to the Defendant and court fee and a land registry fee which have been charged to Ms Daley, the charges for the period 2006 to 2009 total £3,265.52 by my calculation. (Charges after 2009 and the introduction of the new tariff have not been attacked as unfair terms.)
- Applying Regulation 5 and 6 and with reference to paragraph 1(e) of Schedule 2, as the FSA concluded these are provisions that require a consumer to pay sums that are not linked to a reasonable estimate of costs, and therefore the FSA concluded they were disproportionate. The tariffs were contained, as the OFT stated: “…in an elaborate and intimidating document for consumers, making it difficult for consumers to understand”.
- Considering all these matters, in my judgment, the charge provisions imposed on the account for the years 2006 through to before November 2009, are to be regarded as unfair under the Regulation. They created an imbalance between the parties to the detriment of the consumer, who had to pay charges not linked to Swift’s costs of dealing with a customer in default.
Issue (v) An unfair relationship
- The Defendant has made an application under section 140A and 140B(2) of the Consumer Credit Act 1974, in relation to an unfair relationship she says exists between Swift and herself.
- Section 140A states:
“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—
- any of the terms of the agreement or of any related agreement;
- the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
- 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).”
- And sub-section 2 states:
“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).”
- In arguing that there was an unfair relationship the Defendant relies on a number of issues.
- Firstly, reference is made to the increase in interest rates, which the defendant says were a breach and unfair under the Regulations, causing the Defendant to have to use her pension money. It was argued that such payments were unlawful and gave rise to an unfair relationship. I have already found that the increase in the interest rate was neither a contractual breach nor an unfair term under the Regulations and therefore it follows it does not give rise to any unfair relationship.
- Secondly, Swift levied disproportionate fees and charges despite the Defendant not being in arrears and despite these charges being unfair under the Regulations, and seeking to enforce these charges despite the OFT’s final determination. This, again, is said to give rise to an unfair relationship. Given my finding on the rate changes, Ms Daley was in arrears. As to the charges, I have held that these are unfair under the Regulations for the period 2006 to 2009, and I will come back to the issue of the unfair relationship.
- The third area Ms Daley raises is the management of the mortgage account in seeking to extract funds which it said were not due, evict when Swift had no right to possession and constantly harassing Ms Daley. It is said that this has all caused great distress, inconvenience and medical complications and it is said that this gives rise to an unfair relationship.
- Dealing with each of these elements, first as to seeking to extract funds, as I have already stated, the rate increases were permissible and Swift was entitled to pursue its arrears 2008.
- As to the arrears on the account after 2008, Ms Daley says that she was not in arrears due to the large overpayment she says she made which reduced the Contractual Monthly Instalment (CMI) to £1,570. It is clear Ms Daley paid large sums in 2008 to pay off the arrears and then during 2009 paid in excess of CMI so that there was a surplus on the account. She then paid the sum of £30,000 in early 2010. The account log refers to the handling of this sum. Swift made clear to Ms Daley that an early repayment charge would be applied, hence the deduction from one of the payments credited to the account.
- Swift also wrote to Ms Daley as to whether she wished to continue paying the same CMI (thus paying off the loan earlier) or for the CMI to reduce but payments to be for the same term. Ms Daley opted for the latter. Her expectation appears to have been that sums had been repaid, sums owing had been recalculated and now she would pay a CMI going forward of £1,570.
- In evidence, the explanation Mr White gave was that a large payment was made. It was not possible under this account to make capital repayments but rather the sums paid were credited to the overall sum due of principal and interest. He stated that the CMI would, in fact, remain at an existing figure of £2,126.55, but be met by the monthly figure of £1,570 from Ms Daley and the monthly balance from the pot effectively held by Swift.
- The letter of 28th April 2010 from Swift to Ms Daley made clear that following the lump sum payments, the CMI had been reduced to £1,570. That is not surprising. Provided Ms Daley paid the sum of £1,570 each month going forward, the sum owing at the end of the term would be zero based on that monthly figure and sums already paid. That was a change to the CMI based on the advance payment. The advance payment was in effect banked so as to reduce the total overall sum, and the remaining outstanding sum would be met by a reduced monthly payment. As a result references to a CMI of £2,126.55 were no longer relevant.
- The payments that Ms Daley in fact made from May 2010 up until the date of the Possession Order in January 2015 were £51,634.12. The payments she should have made for that period would be 56 payments at £1,570, which totals £87,920. There is therefore a shortfall of £36,285.88.
- Ms Daley is wrong in her approach as set out in her table and her statement of 30thApril 2015. It is incorrect to add the lump sum payments that she made in 2010 to the monthly payments that she made after that and state that this total figure should be set against the total monthly sums due for that period. It was the effect of making a lump sum payment to reduce the sum outstanding that brought the monthly instalments down. Due to the arrears, Swift were therefore entitled to take action against her by way of possession proceedings. However, in doing so it was not correct for Swift to refer to a CMI of £2,126.55.
- The final area in which Swift are criticised in respect of Section 140A and the management of the account, concerns the steps that they took and what has been called harassment of Ms Daley.
- A considerable part of the evidence was spent addressing the attempts by Swift to contact Ms Daley, and I have read with care the account log which records the communications. The log shows that, at times, Ms Daley was evasive in not returning calls when arranged, not providing information or avoiding a field agent visit despite not cancelling that visit. However, it also shows that in the period April 2013 through to 6th July 2015 Swift, on 101 days by my calculation, tried to contact her by telephone or SMS message. On a number of occasions those were multiple attempts on a single day, and in certain months there were attempts on ten or more days within that month to contact her.
- Ms Daley gave evidence about the calls and the impact on her health. She asserted that the first time she was diagnosed with hypertension was due to pressure placed on her by Swift. At paragraph 17 of her second statement, Ms Daley stated:
“At around the same time as I was receiving harassment from Swift, I also started suffering from high blood pressure. I had to go to my Doctor about this. My Doctor has provided a letter as evidence of receiving treatment during this period of time.”
The Doctor’s letter she produced stated:
“Ms Daley was diagnosed in October 2011 as having borderline hypertension and tests were undergone in December 2011 and medication prescribed.”
The Doctor’s letter does not address the cause of the hypertension.
- The account logs to which I have referred show that after August 2010 the only contact until March 2013 between Swift and Ms Daley was to send her on two occasions the printed tariff charges, on two occasions an annual statement and on one occasion a document headed “Campaign B”. Clearly at the time she was diagnosed with hypertension there can be said to have been no harassment from Swift, and in fact very limited contact with her.
- Ms Daley also stated at paragraph 8 of her second statement:
“As a result direct level of calls and text messages I was receiving to my mobile phone, I had to go out and purchase the second phone at the end of 2012, which was during the period when Swift were constantly phoning my original mobile number claiming my account was in arrears.”
- In response to a question in cross examination:
“Do you say you bought [the phone] because they were calling at the end of 2012?’
Her answer was:
“They were calling me night and day, weekend, house and mobile.”
When taken to the log and shown the contact in 2012 to which I have already referred, her answer was:
“They were calling me before then, they were calling me. May have become excessive around 2013. I got the phone to control them, so I could switch off.”
- The log shows that Swift were not contacting her at the time when she said that she got the replacement phone, and there is no evidence to suggest that the log is anything but accurate. Therefore Ms Daley’s wide, sweeping assertion that “they called me more than the records show” is not corroborated and I do not accept that the log is inaccurate.
- Notwithstanding these points about hypertension and the new mobile number, I do accept that the steps that Swift took went beyond measured warnings. Not only of concern is the number of calls, but also the disregard of attempts by Ms Daley to put in place a system for communication. On 20th November 2014, she contacted Swift stating that communications should be by letter or telephone calls between 7:15pm and 7:45pm. Yet straight away on 25th November, the 2nd, the 9th and the 31st December, Swift sought to contact her by telephone outside those times. She contacted them again on 8th January 2015 and gave times when she was contactable by phone between Monday and Thursday 7:15pm to 7:45pm and Friday 11:00 to 12:30, and yet on 29th January and 5th February she was contacted outside that period.
- While legal action may be an action of last resort and parties are encouraged to take steps to avoid that and Swift may have had a justifiable motivation in trying to ascertain Ms Daley’s circumstances given the large sums which were outstanding and failures by Ms Daley to provide information, that does not excuse the large number of calls that were being made with multiple calls on several days and trying to contact not only by telephone but also by SMS message. This behaviour, in my judgment, crosses the boundary and was oppressive and unacceptable.
- In considering Section 140A I need to have regard to all the matters I think relevant, including matters relating both to the Creditor and to the Debtor:
- Clearly this was a large loan. It was a non-conforming loan where lending risk may be considered greater;
- There had been defaults in payment and considerable arrears had arisen over the history of the account, and Ms Daley was not at all times co-operative in providing information or responding;
- Charges were imposed up until September 2009 which were unfair terms under the Regulations;
- Confusion arose as to whether the CMI had changed to £1,570 given that Swift still referred to the previous CMI;
- Swift’s actions, as exhibited by the log, show unjustifiable pursuit of Ms Daley by way of calls and SMS messages.
- In my judgment, these matters, based on the management of the account and the charges imposed which were contrary to the Regulations, gives rise to an unfair relationship.
Issue (vi) Relief available under Section 140B of the Consumer Credit Act 1994
- Section 140B sets out the powers of the Court. This gives me wide powers which should, of course, be exercised proportionately and to reflect the level of unfairness of the actions.
- First, the charges that relate to the period 2006 to September 2009 under the original tariff should be credited to Ms Daley’s account and any interest charged on those sums should also be credited.
- I have found such terms to be unfair and their imposition also forms part of my finding on unfair relationship. While I do not see that this claim gives rise to a limitation issue, I have been referred to cases of Patel v Patel  EWHC 3264 (QB) and Rahman v Sterling Credit Ltd  All ER (D) 1016. Patel v Patel states the twelve year limitation period begins to run from the conclusion of the agreement for the purposes of Section 8 of the Limitation Act 1980. There is an ongoing relationship here and as such a claim is permissible. Nor do I consider it an abuse of process. Whilst there may have been an earlier Possession Order, that did not consider whether the Tariff charges were unfair or the issue of an unfair relationship.
- Secondly, with regard to the management of the account, my attention has been drawn to the cases of Harrison v Link Financial Ltd  EWHC B3 and Roberts v Bank of Scotland PLC  EWCA Civ 88. In the latter case brought under the Protection of Harassment Act 1997, damages were awarded of £7,500. The events as I have described are of a similar magnitude and therefore I order that the sum of £7,500 be credited to Ms Daley’s account to reduce the sums outstanding.
Issue (vi) The Redemption Figure
- Turning to the first application, which addresses the redemption figures, I am not in a position to calculate what the correct redemption figure should be. All I can say is that, on the basis of my findings, the payments made up until 3rd March 2006 are £213,154.16 as set out in the Swift Statement. The CMI since May 2010 has been a figure of £1,570, and clearly there need to be deductions made in line my determination on tariff charges and unfair relationship. I would welcome counsels’ submissions on the next steps on that, also the terms of an order and any submissions on costs.
End of judgment