GRAHAM CHAMBERLAIN v NORTHERN ROCK (ASSET MANAGEMENT) PLC [2013] EW Misc 6 (CC)

IN THE BRIGHTON COUNTY COURT

[2013] EW Misc 6 (CC)

Case No Claim No. 2YK52809

Venue Claim No. 2YK52809, William Street, Brighton East Sussex

Between

GRAHAM CHAMBERLAINClaimant

NORTHERN ROCK (ASSET MANAGEMENT) PLCDefendant

Before

District Judge Wright

Counsel for the Claimant: MISS CAROLINE LODY (instructed by Wixted & Co Limited t/a Claims for You, Putney)

Counsel for the Defendant: MISS ELAINE SKITTRELL (instructed by Squire Sanders (UK) LLP, Leeds)

Date 23 January 2013

[1]THE DISTRICT JUDGE: This is an application by the Defendant to set aside a default judgment. The position is that Mr Chamberlain, the claimant in this matter, issued proceedings seeking damages. Essentially, what he says is that he had two loan agreements with Northern Rock, the defendant. My understanding, from what I have been told is that the second agreement effectively, replaced the first agreement. I should say that the claimant has been represented by Ms Lody of counsel and the defendant by Ms Skittrell of counsel.

[2]The claim is based on the following. First of all it is alleged that the defendant negligently mis-stated the first and/or the second policy to be compulsory and/as being required by the defendant. Secondly, that the policies were negligently sold either in breach of an alleged duty not to make partial non-disclosure or in breach of an alleged duty of care. The nub in relation to this particular application however is that the relationship between the parties is alleged by the Claimant to be unfair within the meaning of Section 140A of the Consumer Credit Act 1974 and, fourthly that, the second agreement failed to state correctly the amount of credit and/or the total charge for credit so rendering the agreement unenforceable. What is claimed are damages; an order pursuant to Section 140B of the Act and a declaration that the second credit agreement is unenforceable.

[3]The claimant applied for judgment to be entered and the basis upon which judgment was sought to be entered was on the basis that the defendant had not –filed a defence or acknowledge of service. The request for judgment is dated 14.8.12 and reads as follows:- "The defendant has not filed an acknowledgment of service or a defence to my claim and the time for doing so has expired. I request judgment to be entered against the defendant for an amount to be decided by the court and costs."

[4]The first submission made on behalf of the defendant in support of the application to set aside the judgment is that the claimant has not adopted the Consumer Credit Act practice direction under Practice Direction 7B of the Civil Procedure Rules. Reliance is placed by Ms Skittrell on the following: She refers first of all to Practice Direction 2 of Part 7B. Paragraph 2.1 reads:

"A claimant must use the Consumer Credit Act procedure where he makes a claim under a provision of the Act to which paragraph 3 of this Practice Direction applies."

It is said, and it is accepted by Ms Lody on behalf of the claimant, that part of the claim does come within paragraph 3.1(5) of Practice Direction 7B. That is section 140B(2)(a) (Debtor's or surety's application for an order relating to an unfair relationship). However, what she says is that that represents only part of the claim. There is also a claim in respect of negligent mis-statement and negligent selling. There is a claim in relation to the total charge nor the amount of the credit being correctly set out and she says that it is proper in such circumstances for the claimant to have used the procedure which they did. It does not apply to – she says – to a claim where there is a claim based upon a number of heads including a claim under the Consumer Credit Act. She submitted the reason for Practice Direction 7B; is that this provides a more straight forward procedure which results in the court fixing a hearing date on issue of the claim form. It is accepted in this case that when the claim form was issued no hearing date was fixed. Paragraph 5.3 goes on to provide:

"Where a claimant is using the Consumer Credit Act procedure, the defendant to the claim is not required to: (1) serve an acknowledgment of service, or (2) file a defence, although he may choose to do so."

Of course, the basis upon which judgment has been obtained in this case is that the defendant has not filed either an acknowledgment of service or a defence. The point to consider therefore is where you have a claim based on a number of separate bases, here including an allegation of an unfair relationship under Section 140B of the Consumer Credit Act whether, it should proceed under Practice Direction 7B or under the normal Part 7 procedure as in this case. I have to say that on reading of the commentary to the Practice Direction it does not appear, interestingly, that there are any authorities on this point. What is said by Ms Lody is that the normal procedure where you have a claim, as in this case in relation to mis-selling of PPI's, is that Practice Direction 7B would not apply because a more complex procedure needs to follow with the directions for disclosure, inspection, witness statements etcetera. It is not appropriate she says for a hearing to be fixed at that early stage.

[5]It is said by Ms Skittrell that that, is not the case. The reason why Practice Direction 7B was drafted in this way is that these sorts of claims will often arise out of transactions which have occurred many years before and, in those circumstances, there is some difficulty. I have to say on reading the Practice Direction I am satisfied that where a claim is made which includes a claim under paragraph 3.1 that, indeed, it should proceed under Practice Direction 7B. The fact that there are other claims included does not, in my view, mean that it is taken out of Practice Direction 7B and I consider that in such circumstances the procedure should be that a hearing date should be fixed under paragraph 5.1 of Practice Direction 7B. This was not done. Accordingly I consider there was not an obligation on the defendant to serve either an acknowledgment of service or a defence and such circumstances it was not appropriate for judgment to be obtained.

[6]There is another matter in relation to Part 12. Part 12.4 (2) of the Civil Procedure Rules requires that:

"The claimant must make an application in accordance with Part 23 if he wishes to obtain default judgment on a claim which consists of or includes a claim for any other remedy [ which of course it does in this case ]."

The point is – and I think it is accepted by Ms Lody – that an application was not made under Part 23. However, what she submits is that Part 12.4 (1), subject to paragraph (2) which I have just referred to:

"A claimant may obtain a default judgment by filing a request in the relevant practice form where the claim is for: (a) a specified amount of money; (b) an amount of money to be decided by the court... [ which is, in fact, this case – sub-paragraph (b) ]."

Therefore, what she is saying is that, essentially, the Counsel was entitled to seek judgment in the way he did. Sub-paragraph (3) is also, in my view, material:

"Where a claimant: (a) claims any other remedy in his claim form in addition to those specified in paragraph (1); but (b) abandons that claim in his request for judgment, he may still obtain a default judgment by filing a request under paragraph (1)."

However, I accept the submission made by Ms Skittrell that, there has to be a specific abandonment of the claim. Looking at the commentary at paragraph 12.4.7 in the White Book :

"Where the claim form includes, in addition, a claim for some other remedy (a mixed claim) the claimant may still obtain judgment for such of the remedies that fall within 12.4.1 provided as 12.4.3 states: 'he abandons that claim in his request for judgment.'"

There is nothing in the request for judgment that states the Counsel does abandon such claim. In the circumstances I am satisfied that judgment must be set aside. (End of Judgment)