Wilson v Robertsons (London) Ltd [2006] EWCA Civ 1088

[2006] EWCA Civ 1088Case No B2/2006/0121
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WANDSWORTH COUNTY COURT
HH JUDGE WALKER
WL100916
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 27/07/2006
Before
LORD JUSTICE CARNWATHLORD JUSTICE MOSES
Between
PENELOPE WILSONAppellantROBERTSONS (LONDON) LTDRespondent
PENELOPE WILSON (Litigant in Person) APPELLANT for in personMATTHEW COOK (instructed by Messrs. Lester Aldridge) for RESPONDENTHearing Hearing date : 11 th July, 2006
JudgmentCarnwath LJ :Background
[1]The Respondent is a jeweller and pawnbroker. Mrs Wilson was a customer between April 1995 and April 1999. Her claim related to 27 pawn broking agreements entered into during this period. It was common ground between the parties that all 27 agreements were regulated agreements for the purposes of the Consumer Credit Act 1974. She claimed that the agreements were defective under the Act, and therefore unenforceable or only enforceable by order of the court. She also claimed that, in particular because of the rate of interest payable, the agreements were exorbitant and contravened ordinary principles of fair dealing.[2]Her claim was issued in April 2001. It was stayed by the court pending the outcome of an appeal to the House of Lords in another of her cases: Wilson v First County Trust Ltd [2003] UKHL 40. In their decision dated 10th July 2003, the House of Lords held that the statutory regime of the 1974 Act, albeit in some respects “drastic, even harsh, in its adverse consequences for a lender” (para 72), was not incompatible with the European Convention of Human Rights.[3]Following that decision, the stay on the present proceedings was lifted in November 2003, and the case came for hearing on April 2005 before HH Judge Rose. His judgment in turn was subject to an appeal before Laddie J in June 2005. The combined effect of those decisions was that the agreements were held to be both defective and extortionate. There was no dispute that Mrs Wilson was entitled in principle not only to retain the amount of the loans to her, but also to return of the pawned goods, and to repayment of interest previously paid by her. The Respondent had returned the goods under six of the open agreements in September, 2003. However, in respect of the seventh agreement (contract 81523), the pawned item – a gold signet ring engraved with her grandmother’s crest - had already been sold for its gold value (£19) in February 2000 and could not be returned.[4]The matter came before HH Judge Walker in December 2006 to determine the outstanding issues as agreed (para 14): i) The agreement having been found to be unenforceable, what sums, both as to principal and interest, are to be repaid by the defendant to the claimant; ii) The amount of damages to be paid by the defendant as a result of the destruction of the gold ring pawned under an unenforceable agreement; iii) The amount of interest to be added to sums in paragraphs 1 and 2 as compensation for the delay caused by the stay of the claim; iv) The costs of the whole claim.[5]He determined both substantive issues (i) and (ii) in favour of the Respondent, and made orders in respect of interest and costs. Permission to appeal was granted by Hallett LJ on issues (i) and (ii). She did not grant permission on issue (iii), but indicated that the application could be renewed before us. We refused the application for reasons which I will explain later in the judgment. It was agreed that discussion of issue (iv) would await the decision on the substantive issues.

The agreements

[6]Seven items, or groups of items, were initially pawned in return for seven loans. But at the expiry of the period set by each initial agreement the loan was “renewed”, a word which I use at this stage purely by way of description. It is the correct characterisation of these “renewal” transactions which is at the heart of the main issue in the case.[7]As to the nature of the renewal arrangements, the judge referred to the evidence of Mrs Wilson herself, and of Mr Michaels and Mr Hall, respectively director and employee of the Respondent. He treated them as “incorporated” into the judgment. Mrs Wilson’s evidence was that she understood each renewal agreement as – “… a novation, the new advance … being applied to discharge the indebtness on the earlier agreement” Mr Michaels said that the purpose of the renewal - “… was to ensure that the item pledged was retained by us. No additional sums of money were paid to her. Mrs Wilson’s liability to pay the principal on the first agreement was removed and replaced by the liability to pay the same amount on the subsequent agreement. ” Mr Hall said:
“It was often the case that when someone came in to redeem the pledge they in fact wanted to keep the loan outstanding. In those circumstances they would pay the interest off and the capital would be rolled over into a new contract and the pledge returned to the office safe. When this occurred, I would normally endorse the old agreement number on the top of the new agreement so that it could be seen instantly that it was a roll over.”
[8]The agreements themselves were in standard form. There was no material difference between the initial agreement and the renewals. For example, agreement no. 61360, dated 22nd May 1995 related to a loan of £400, secured by deposit of a Cartier watch. The agreement stated:
“I (Mrs Wilson) have deposited with the pawnbroker and the pawnbroker has taken in pawn, the property as stated in the Schedule above (i.e. the watch) as security for a loan of £400.00 together with interest at the monthly rate of £18 (4.5%)”
The period of the loan was given as six months, and the “redemption date” was given as 21st November 1995. Clause 2 provided:
“2.1 When the property becomes realisable under this Act the pawnbroker may sell the property either by public auction or by private treaty; 2.2 For the purpose of section 121(6) of the Act it is agreed between the pawnbroker and the debtor that the true value of the property shall have been obtained if the property is sold by the pawnbroker at public auction.”
As explained by Mr Hall, the only indication on its face of a renewal agreement was the addition at the top of a manuscript note of the number of the original agreement in that series.[9]It should also be noted that in some of the cases the renewal arrangements were backdated. This was at the heart of one of the issues before Laddie J, and one of the reasons for declaring the agreements defective. He gave an illustration:
“The relevant facts in this case may be illustrated by reference to two agreements entered into by Mrs Wilson under which she pawned to the Respondent the same Lady's Cartier Wristwatch. The first is contract No. 61360. It is dated 22 May 1995 and it sets a monthly interest rate of 4.5%. It sets a full period of redemption of 6 months, that is until 21 November 1995. In fact the watch was not redeemed within that period but the Respondent had not disposed of it when the second agreement, No 66330, was entered into. The latter was signed by Mrs Wilson on 22 March 1996. However it was antedated by three months to 21 December 1995. The 6 month redemption period was fixed as 20 June 1996, that is to say 6 months from the antedated date, not from the actual date of signing. From the latter date, the redemption period was only 3 months. Under the new agreement the monthly rate of interest was 5%.”

The law

[10]At the heart of the case is the interpretation of section 106(d) of the 1974 Act to the facts of the case. That section provides:
“106 Ineffective securities Where, under any provision of this Act, this section is applied to any security provided in relation to a regulated agreement, then, … (a) the security, so far as it is so provided, shall be treated as never having effect; (b) any property lodged with the creditor or owner solely for the purposes of the security as so provided shall be returned by him forthwith; (c) the creditor or owner shall take any necessary action to remove or cancel an entry in any register, so far as the entry relates to the security as so provided; and (d) any amount received by the creditor or owner on realisation of the security shall, so far as it is referable to the agreement, be repaid to the surety.”
[11]In relation to closed agreements, section 139 gives the court power, if it “thinks just”, to “reopen” an agreement which is “extortionate” (as defined by s 138). The court may make various forms of order, including directing “accounts to be taken”, for the purpose of “relieving the debtor or a surety from payment of any sum in excess of that fairly due and reasonable.”[12]Reference must also be made to the definitions of “security” and “surety” (s 189): “Security” in relation to an actual or prospective consumer credit agreement or consumer hire agreement, or any linked transaction, means a mortgage, charge, pledge, bond, debenture, indemnity, guarantee, bill, note or other right provided by the debtor or hirer, or at his request (express or implied), to secure the carrying out of the obligations of the debtor or hirer under the agreement; “Surety”means the person by whom any security is provided, or the person to whom his rights and duties in relation to the security have passed by assignment or operation of law.[13]Also relevant are the provisions indicating when a security becomes “realisable”. Section 116 provides a minimum period of 6 months within which the pawn is redeemable. If the pawn has not been redeemed by the end of the redemption period, it “becomes realisable” (s 120). Where the pawn has become realisable, the pawnee may sell it having given notice as required by s 121.[14]Finally, in relation to the claim for the signet ring, the Respondent relies on section 170(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.”
Payments for closed agreements The issue

Payments for closed agreements

[15]Mrs Wilson claims that, on its true legal analysis, each renewal was a “novation”, involving repayment of the original loan followed by the making of a new agreement for a loan of the same amount, secured by the redeposit of the same item.[16]The consequence, according to her argument, can be best seen from an example: i) Mrs Wilson enters into agreement 1 under which she pawns the watch for £400, and receives a loan of £400. ii) At the end of the period, she enters into agreement 2 under which the same item is stated to be pawned for the same £400 amount. She pays the interest due on agreement 1. No further money changes hands, but her liability to pay the sum of £400 is treated as a liability under agreement 2. iii) This process is repeated with agreement 3 replacing agreement 2, and then agreement 4 replacing agreement 3. Again she pays interest due on each agreement, but no money changes hands in respect of principal, her liability being transferred to the new agreement.[17]At the end of this process, because the agreements were unenforceable under the Act, it is not in dispute that she is able to retain the £400 loan, to recover the watch, and to receive back all the interest payments actually made. However, in addition, she claims that she is entitled to payment (in this example) of a further sum of £1200 (£400 x 3), on the footing that, even though no new money changed hands, on a true legal analysis she had paid £400 to discharge each of the agreements. This, she argues, was “an amount received by the creditor… on realisation of the security…” within the meaning of section 106(d) of the Act, and therefore is repayable to her.

Discussion

[18]There is no dispute that in this case section 106 applies. Equally, there is no dispute that, by virtue of the wide definitions of “security” and “surety”, to the extent that she had repaid the loan by a payment of money, that would have been an amount received by the broker “on realisation of the security” and would be repayable to her as “surety”. The issue is whether, as Mrs Wilson contends, the same applies to the renewal agreements, even though no new money changed hands.[19]The judge thought not. He said:
“In my judgment, whether or not one characterises these fresh agreements as novations, as they may well be, the fact is that Mrs Wilson did not pay any money to Robertsons on each such novation, but each such agreement was intended to be a successor to and linked with the earlier agreement in respect of the same item pledged. Thus, it cannot be said that any amount was received by Robertsons on the realisation of the security beyond the interest payments and the document fees.”
[20]Apart from authority, my initial reaction was that on this issue he was clearly right. Nothing was “realised” under the renewal agreements; their whole purpose was to defer realisation for a further period. Even accepting the “drastic” effects of the 1974 Act, it would be contrary to all reason, or any legitimate statutory purpose, for Mrs Wilson to be able to recover, on top of her actual outlay, a windfall of three times the amount of the original loan.However, this is said to be the effect of this court’s decision in another of Mrs Wilson’s cases, Wilson v Howard (Pawnbrokers) Ltd [2005] EWCA Civ 147, to which I must now turn.

Howard (Pawnbrokers)

[21]The Howard (Pawnbrokers) case concerned a series of pawn agreements, similar to those in the present case.[22]The judge in that case (HH Judge Rylands) had held the agreements “grossly contravened the principles of fair dealing”, and breached the Act in a number of respects; the result was that they were unenforceable, the goods had to be returned and “justice required him to re-open the superseded agreements”. For the latter purpose he had initially intended to direct the taking of an account by an independent person. In the event, however, he had felt able to arrive at a final determination himself on the basis of submissions by the parties, resulting in an award of almost £1,500 in Mrs Wilson’s favour.[23]Permission to appeal to this court was given on a single ground:
“The learned judge was [wrong] in law, in accepting the accounts in respect of giving credits for the loan to the claimant and accepting that the loan was deemed to have been paid. This creates an unjust enrichment by profit for the claimant, and an injustice to the creditor.”
In this court, both parties appeared in person. The appeal was dismissed.[24]Sedley LJ (with whom Potter LJ agreed) adopted the findings of the judge, which he summarised:
“… a series of pawnbrokers' agreements entered into between the parties from June 1995 to July 1999… , 67 in all, (by which) Mrs Wilson, the claimant, successively pawned 13 groups of objects, periodically paying off the capital and interest purportedly due on each one and thereupon re-pledging the goods under a fresh agreement.”
[25]He added “A feature of the defendant's system was that he would charge a full month's interest for a period short of a month - sometimes a single day - calculated as often as not from a foreshortened redemption date. The use of fresh agreements then enabled him to set off against the principal advanced under each one the debt supposedly owed under its predecessor. ” He noted that there was no appeal in respect of the bulk of the judge’s findings:
“We are concerned only with whether the adoption of an account which re-credits the same principal to the claimant at each renewal is wrong in law or, if discretionary, wrong in principle.”
[26]He noted that Mrs Wilson had made clear that the order which she was defending related only to the eight held by the judge in law to be unenforceable. He continued: “13. As to these, the claimant submits that section 106 of the Consumer Credit Act 1974 is unequivocal. It provides that in circumstances such as obtained here "the security ... shall be treated as never having effect"; property lodged as security shall be returned; and "any amount received by the creditor ... on realisation of the security..." is to be repaid. Realisation in Mrs Wilson's submission includes receipt of payment from the debtor as well as sale by the creditor. The word is not defined in the Act but it seems to me that the submission must be correct. If it were not, a diligent debtor would be worse protected than a dilatory one. Professor Goode's annotation of the section takes a similar view. As I have said, there is no dispute before us that, as there stated, “realisation… includes receipt of payment from the debtor as well as sale by the creditor”.[27]Sedley LJ continued:14. The defendant, Mr Howard, contends that this is an injustice to him and an unjust enrichment of Mrs Wilson. He submits that the judge was not obliged to enforce the account on such a basis and was therefore wrong in principle to do so. The error, he submits, lies in the judge's treatment of each successive unenforceable contract as attracting fresh relief under the statute, when in reality the same loan was being carried forward.15. The difficulty which this argument encounters is not only that it has been unappealably decided that these were indeed novations - that is fresh contracts - but that this scheme was consciously adopted by the defendant for his own profit, enabling him, had the contracts been enforceable, to charge interest (at a rate held to be grossly exorbitant) by lending on the novated agreements the amounts outstanding on the old ones, and on the fresh pledges of further goods by lending at interest amounts of already outstanding interest.16. It is nevertheless true to say that where, say, two in a series of loan agreement for £100 on a particular security have been held to be unenforceable, if the judge is right, the claimant will now retain the goods, will retain the initial advance and will secure a repayment in addition of the two further loans - a clear profit, so Mr Howard submits, of £300.” Sedley LJ then referred to the House of Lords decision cited above, noting its acceptance that the effects of the Act might be “drastic” for a lender. He said:
“18. In the light of this reasoning, which reflects that of the Appellate Committee as a whole, I find it much less difficult than it might otherwise have been to see the legitimacy of the outcome to which in this appeal Mr Howard objects. It is true, as it is in other fields of law, that the penalty justly suffered by the wrongdoer goes with less obvious justice into the pocket of the victim. This is probably an inevitable by-product of a legislative scheme which grafts public-interest regulation on to private law remedies. It is equally possible in a regulatory system to make the wrongdoer answerable, in part or in whole, to a public authority; but the legislative choice here has been to leave the remedies within the framework of the law of debtor and creditor. 19. One might add to this two points stressed by Mrs Wilson. One is that in pawn transactions the debtor is particularly at risk because there is nothing to stop the pawnbroker selling the security in order to realise the amounts owed without resort to the courts, leaving it to the debtor to go to court if anybody is going to do so. The other is that the unenforceability of these contracts derives in large part from far from technical breaches. They include Mr Howard's entry into the agreements under a name in which he was not licensed to trade and the omission in other contracts of the identity of the lender. 20. In this situation, given the provisions of section 106, it seems to me that the judge was justified in adopting the claimant's account of the parties' mutual indebtedness, and that in all probability he was obliged to do so. The moral for a pawnbroker such as Mr Howard is that if he wants the rewards of his trade he must operate strictly by the book, and that the result of failing to do so may be not merely to unravel agreements, but to reverse the indebtedness that they have purportedly created.”

Application to the present case

[28]The judge in the present case distinguished that decision on the facts. He held that on the evidence Mrs Wilson did not pay off the capital sum on any of the closed pawn-broking agreements, but instead only paid the interest, the capital sum being transferred from the old agreement to the new agreement. Howard’s case, had proceeded on a different factual basis, that is that under the relevant agreements (as stated by Sedley LJ) Mrs Wilson had been “periodically paying off the capital and interest” on each renewal (see para 24 above). That, the judge considered, was not a possible interpretation of the evidence before him, which was that no capital was repaid at the time of renewal.[29]Mrs Wilson submits that this is not a valid basis of distinction. The facts, she says, were for practical purposes the same as in the present cases, and Sedley LJ had made clear that the renewal agreements were “novations – that is, fresh contracts”. She cites a passage from Goode “Consumer Credit Law and Practice” IC [35.13]:
“… a refinancing transaction under which the parties agree not merely to vary the original agreement by rescheduling the terms but to apply the credit under the new agreement to settle the indebtedness under the old agreement will constitute a novation, the earlier agreement being terminated and not merely varied.”
[30]Like the judge, I do not think that the categorisation of the renewals as “novations” assists the present argument. A “novation” simply means the substitution of a new agreement for an old one (see Halsbury’s Laws Vol 9(1) Contract para 1036). The word carries no specific implication as to the terms on which the substitution is made. In that passage Professor Goode refers to the old indebtedness being “settled” by a credit under the new agreement. That is not, as I understand it, implying an actual payment of money. I see nothing there which is inconsistent with the judge’s interpretation of the agreements in the present case. Nor is Mrs Wilson’s case helped by reference to the special statutory provisions for “linked agreements” or “modifying agreements”. The issue is not what definition is to be applied to the agreements, or whether they complied with particular statutory requirements, but simply what happened in practical terms.[31]She submits further that the judge had failed to take account of the terms of Judge Ryland’s judgment in the Howard case. I have not found the passages on which she relies easy to follow, or to relate to the arguments in the present case. Judge Ryland had held that it was necessary to reopen the closed agreements in order to do justice, because they were all “inextricably interwoven with each other”, so that it “would create serious injustice” if they were not to be re-opened, and that it was necessary to determine – “… what effect each one has upon its successor and what effect it has upon all the circumstances of the case.” (para 26B) There follows the first passage on which Mrs Wilson relies (para 26B), in which he considered the relationship between the successive agreements, holding that - “… the parties intended to enter into a new Agreement on each occasion. The successor Agreements were not modifying Agreements which varied the earlier Agreement. They were free-standing Agreements… I find that each of these Agreements stands alone and is not affected in its terms, particularly as to the stated amount of the credit and of interest, by the predecessor Agreement….” (para 26B) He held therefore that it was necessary to look at each agreement separately, for the purpose of determining the nature of its defects, and whether it would be just to enforce it. He accepted the argument of Mrs Wilson, which he described as “ingenious” to the effect that – “… the pawnbroker must be taken to know the law and be required to return the amount of the loan and interest forthwith to her”[32]The second passage relied on by Mrs Wilson (para 36) appears to have been added by the judge subsequently, because he refers to an ambiguity in the “original judgment”. (At the end of the judgment there is a reference to it being “redated”). The ambiguity related to the return of the loan monies: “It was ambiguous because I had not appreciated initially that the loan was not re-paid by the Claimant on each occasion upon which she renewed the Agreements, and therefore, the one loan sum was that which was advanced by the defendant…” (para 36) It appears from the manuscript notes at the end of the judgment that there was a further post-judgment exchange between Mrs Wilson and the judge, as to whether the claimant had renewed her pledge “by paying the loan and interest” as apparently stated in the original judgment (para 3), rather than simply “by paying the interest” as in the version before us. The judge stated that he “accepted her submission” based on the form of the original pleadings.[33]None of this seems to me to help Mrs Wilson’s argument in this appeal. I confess to being left in some uncertainty as to what Judge Ryland finally decided on this point. There seems to have been some confusion in his mind as to whether on each renewal the loan was in fact repaid, or was at least to be treated under the pleadings as having been repaid. But, whatever he decided on this point, it is not binding on us, except to the extent that it was an issue in the appeal before this court, and subject to decision. However, as we have seen this court proceeded on the basis that there was no appeal against the judge’s interpretation of the agreements. Given the limited basis of the appeal, it is not surprising that it was not thought necessary to probe further into the facts.[34]In conclusion I see nothing in the Howard case, at either level, which precludes us from giving effect to the true facts. As the judge found, and as was clear on the evidence, the loans were not paid off at the time of the renewals. No money changed hands. There was simply an agreement to transfer the indebtedness to the new agreement. On this issue, I would uphold the judge’s decision and dismiss the appeal.

Value of the ring

[35]This issue concerns only the seventh agreement, under which, as I have said, the pawned item (a gold signet ring) was not returned because it had already been sold. It realised only £19 representing its meltdown value. It was accepted that she was entitled to payment of this amount under section 106(d), as a sum received “on realisation of the security”. However, she claimed damages representing the cost of a replacement, which she put at not less than £1,020.[36]The judge rejected the claim, with some reluctance, because he thought it was precluded by section 170 of the Act which I have already quoted. This, he held, had the effect that Mrs Wilson’s remedies were limited to recovery under the Act. In case he should be found wrong on this point, he considered what he would have awarded by way of damages had been free to do so. He refused to allow Mrs Wilson to raise a new point (based on s 121(6)), that the burden was on the respondent to show that the ring had been sold at reasonable market value. He held that it was for her to prove the value of the ring, which – “… is that of the ring as it is rather than the cost of replacing it with a new one of similar characteristics”. He referred to Mrs Wilson’s own evidence, which consisted of two letters giving estimates of replacement cost “in the region of £1,000 to £1,100”; he commented:
“Mrs Wilson did not even have any letters of instruction to these jewellers that might have enabled me, and more importantly the defendant, to examine the brief given to the writers of these letters. Mrs Wilson told me that she had orally described her grandmother’s ring to them. On their own, I consider these letters to be of little persuasive value to me.”
He noted, however, that the respondents had made an offer, based on an estimate obtained by them which gave an estimate of £550 to £600 plus VAT as the trade price for a replacement figure. They had offered to provide a replacement themselves, or pay £750 in full settlement of the claim. That offer had been withdrawn in September 2004, but the judge regarded it as suggesting that the figures quoted in Mrs Wilson’s estimates were “not unreasonable”. He concluded:
“Bearing in mind that she is not entitled to the replacement value, but the value of the old ring, I assess the value, doing the best I can, at £450, and this is the sum that I would have awarded to her on this aspect of the claim but for the terms of section 170(1).”
[37]Before this court Mrs Wilson argues that the judge was wrong to hold that her claim was precluded by section 170(1); and that he was also wrong not to award her the full replacement value. For the respondent, Mr Cook supports the judge’s decision on liability. He also challenges the judge’s figure of £450 as “plucked from the air”; the only true evidence of value was the actual sale for £19.

Liability

[38]Surprisingly, both parties claim the support of Professor Goode’s commentary on section 170, in his great work on the Act (Consumer Credit Law and Practice). The judge understood, from extracts to which he had been referred by Mrs Wilson, that his decision “presumptuously” was flying in the face of the opinion of the Professor that there could be an action in tort; but he found it impossible to reconcile that opinion with “the absolute and sweeping terms” of the section. Mr Cook submits that he had misunderstood the relevant commentary.[39]Referring simply to the section, I do not read it as precluding Mrs Wilson’s claim. A breach of “any requirement of the Act” will incur no civil sanction “as being such a breach”. Mrs Wilson’ claim is not for a breach of the Act. It is a simple common law claim for conversion of her property. The only right which the respondents had to sell her ring was by way of realising its security under the pawn agreement. That security having become ineffective under the Act, there is nothing to prevent her relying on her ordinary property right. The specific requirements imposed by section 106 to return the security, or to repay any amounts realised, are not inconsistent with a parallel common law claim for damages if the property is sold without any right to do so.[40]That view seems to be supported by a passage in the commentary on section 170 (Goode para 5.330-340), under the heading “As being such a breach”:
“(Section 170(1)) merely restricts sanctions (or remedies) in respect of the breach of a requirement made by or under this Act. In so far as an act or omission is also wrongful in some other respect, eg it is a breach of contract, or a tort, nothing in this section operates so as to prevent an action lying in respect of that civil wrong…”
[41]Mr Cook relies on an earlier passage in the notes on section 170 (under “General effect”):
“Nor… may a breach of the Act be treated as a breach of contract or as giving rise to any liability to make restitution of property or money. The intention of the section is, therefore, not merely to limit civil or criminal proceedings arising from a breach of the Act but… to deprive such a breach of any legal consequences other than those provided by the Act itself.”
That is dealing simply with the consequences of a breach of the Act; it says nothing about remedies for common law wrongs outside the Act. Mr Cook also referred to us to the notes on section 65 (“Consequences of improper execution”), to the effect that “unenforceability” under section 65 “is normally the only direct sanction” against a creditor where an agreement is not properly executed:
“There is no question of the agreement being void against the debtor, or of his being released from his liabilities by reason of improper execution of the agreement without a court order.”
Again that passage is not dealing with common law wrongs, and it says nothing about the consequences of the security becoming ineffective under section 106.[42]In my view, therefore, the judge was right to think that the claim was supported by Professor Goode, but wrong not to follow him.

Amount

[43]A claim for damages having been established, the remaining issue is the amount. The judge would have awarded £450, on the basis that there was no right to claim the cost of replacing it as new. Mrs Wilson challenges that view. She refers to a passage in what I think must be the previous edition of Halsbury’s Laws Vol 3(1) on Bailment para 79, referring to damages recovered by a bailor in negligence:
“In negligence, where a bailor complains of loss, destruction or damage, the compensatory rule will normally be satisfied by awarding him the cost of repair or replacement in the market; but where the chattel cannot be replaced by resort to the market, the bailor may recover the cost of having a substitute made, provided that is a reasonable course to adopt.”
The principal authority cited is J & E Hall Ltd v Barclay [1937] 3 All ER 620. It is sufficient to quote the short headnote:
“The respondent company did work for the appellant in erecting and testing a pair of experimental davits. The davits and testing apparatus were then dismantled and kept by the respondent company for several years. A dispute arose over the non-payment of part of the appellant’s account for work done, and a writ was issued. The appellant counter-claimed for damages for detinue or conversion of his davits and testing apparatus, which it transpired that the respondent company had sold as scrap. The judge awarded the appellant the scrap value of these articles as damages. On appeal:— Held – the appellant was entitled to the value of the articles converted, which was ordinarily the price of similar articles in the market. As there was no market in the articles concerned, the measure of damages was the cost of replacement.”
[44]Subject to any question of reasonableness, that seems to provide direct support for Mrs Wilson’s approach, in relation to a ring which had a special engraving, and for which a replacement could not be obtained in the ordinary market. The judge cited no authority to the contrary, and none was cited by Mr Cook. The judge did not suggest that there was anything unreasonable in her wish to replace the ring, merely that he was precluded by law from making an award on that basis. Indeed the respondents had themselves initially offered to pay for such a replacement, without any suggestion that it was an unreasonable demand.[45]As to the figures, notwithstanding his criticisms of Mrs Wilson’s evidence, the judge found that her estimates were “not unreasonable” in the light of the respondents’ own estimate. In principle, therefore, I would award her the lower of the estimates, that is £1,020. I say “in principle”, first, because we have heard no submissions as to the period for which interest if any should be paid or to how, if at all, we should take account of the age of the estimate (made in November 2004) and secondly because, in the light of our judgment, the respondents may find it cheaper to renew their offer to secure a replacement themselves at the trade price. I would hope that these issues can be resolved by agreement.

Interest

[46]Finally I must explain my reasons for refusing permission to appeal on issue (iii) relating to interest. This was intended to represent compensation for the delay caused by the stay of the claim. The judge awarded interest at 7%. As far as appears from his judgment, there was some dispute about the precise method of calculation, but not about either the general approach or the rate. Mrs Wilson now seeks to argue for a different approach, which she takes from the judgment of Chadwick J in Mathew v T.M.Sutton Ltd [1999] GCCR 1865. According to the headnote, it was held that – “Interest is payable in equity on the surplus proceeds of pawned goods from the date of their sale to the date of payment.” The judge ordered an enquiry – “… as to what use was made by the defendant of the proceeds of sale and what return was obtained by him on those monies in order to determine the rate of interest to be applied.”[47]I am far from satisfied that such an approach is applicable to the limited issue in this case, relating to the delay caused by the stay of the claim. In any event, although Mrs Wilson says that she mentioned the Mathew case to the judge, there is no indication that she developed the issue in any depth, nor that she explained how such an enquiry would work in practice on the facts of the present case. Even at the time of the permission application in this court, Hallett LJ noted:
“Mrs Wilson… said quite frankly that she was not really in a position to argue this point properly.”
Before us, the argument had not advanced beyond generalities. It is now too late for her to pursue this point.

Conclusion

[48]For these reasons, I would dismiss the appeal on the amount of the repayments, but allow the appeal in relation to damages for the loss of the ring. I would refuse permission to appeal on the interest point. We will need to hear further submissions as to the form of order in relation to the ring, unless (as I would hope) the parties are able to agree (see para 45 above).

Moses LJ

[49]I agree.

Cited in 1 later judgment