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National Westminster Bank PLC V Story & Pallister (CA May 1999)

(full listing below) 

Shocking £300 Billions' misuse of judicial power

is evidenced by Section 8 (Regulated Agreements) of

The Consumer Credit Act (1974) ("The CCA"). The Court ruled that we were not protected by the CCA.  The CCA's parliamentary draftsman, Mr Frances Bennion, speaks out, terming the ruling "wholly mistaken" and "incorrect", because 3 existing regulated agreements were refinanced by a new agreement for £35000 which the court ruled was unregulated. ( However, the protection provided to the existing 3 agreements is supposed to remain). (See link to Mr Bennion's writings below)  The Court breaks the golden rule "The Common Law must not defeat the statute", to protect a bank from its regulators the OFT and Bank of England, who followed the case, very concerned of possible licensing considerations where regulated agreements feature, but powerless to investigate the abuse without the Court's ruling that the bank acted in breach of the CCA. Ruling that the CCA did not apply, quelled any questions that arose as to whether Natwest operated a policy of not documenting terms or whether this was just an unfortunate isolated case. The 'Catch -22' - It all depends on whether the agreements were regulated. ( Legal Precedent - Regulated (protected) Consumer Credit Agreements, as defined by S 8 CCA, become unprotected when refinanced in all similar fact cases that follow. Problem here is that the CCA demands that the protection is to remain, as Mr Bennion points out but the Court, having none of it ignores the fundamental fact that regulated agreements are refinanced here by a new debt consolidation loan which provided an additional cash advance. The point that regulated agreements are refinanced proves fatal to the Court's ruling because the Court is not allowed to overrule Primary Legislation; undeterred by this technicality, the Court does so, anyway, unlawfully. This is abuse on a similarly unprecedented scale, because the Court is shown by Section 8 CCA to deliberately favour a bank over the rule of law, where it takes steps, now, when asked how it has assumed an authority it does not possess in order to override Parliament, the Court forthrightly refuses to explain its own acts and omissions which openly favour a non CCA-compliant bank [Natwest refused to document terms demanded by the CCA]).

  

 In short, Section 8 CCA shows that the Court implements its own social policy in order to favour a bank.    These are appallingly serious allegations indeed, which the Court can readily resolve   and we continue to challenge the Court to objectively determine the Section 8 point. "Were the 3 existing agreements regulated under S 8 ?"

  A very simple and easily answered question, but upon which much depends.

Home

The case is succintly described by creditlaw.co.uk experts on Consumer Credit Law,  "This strange case was incompletely recorded and may well have been incorrectly decided" . There are many other commentators, but we are particularly indebted to Credit Law for their kindness and because the site has a full listing of the Court of Appeal Judgment,   http://www.creditlaw.co.uk/Cases/Natwest.htm 

 

 Referring to the "significance" of the existing regulation here, the Act's Draftsman, Mr Francis Bennion, has bravely spoken out against the ruling, (follow the hyperlink below to his writings on the case) because Lord Justice Auld found that the contractual purpose of the new Multiple Agreement here was "partly to replace existing borrowings and partly to provide new monies". Who better therefore, than Mr Bennion to clarify the  intended effect of Section 18 (Multiple Agreements)  to the new package of facilities that the Court allowed to successfully defeat the anti-avoidance mechanisms within Section 18 ? 

 http://www.francisbennion.com/doc/fb/1999/004/multiagreementsconscredit01.htm 

 

The 1974 Act (together with subsequent secondary legislation) was passed for the multitude of reasons advocated by Lord Crowther in his 1971 white paper "Consumer Credit - Report of the Committee [Command 4596]". Lord Crowther found that of all the contracts where consumer abuse occurred, by far the most cases occurred within moneylending. Banks had been exempted from the draconian documentational requirements of the old Moneylending Acts because of their status. Lord Crowther deemed this exemption as unsatisfactory, that a level lending field must be created and maintained. As he prophetically put it, discussing the exemption,

"........to the individual consumer faced with problems of the kind envisaged by protection legislation, it is little solace to know that the other party is a bank"

 

Lord Crowther's white paper was highly critical of the existing Common Law as it applied to moneylending; it had become vague and subjective - and the outcome to a particular commonplace dispute would be decided upon the preferred choice of precedents before the Court. Lord Crowther recommended "a sweeping review" of the law, to correct the mischief in the Common Law with a standardised approach to common problems experienced by both Consumers and Creditors - the Act is not one-sided, its whole aim being to create a level lending field where transparency ruled the day; that "truth in lending" would prevail.

 

The new legal framework was intended to make obsolete, to repeal, and did make obsolete, repealed, but for the decision here, the Common Law into Consumer Credit -  where the new law is to apply - a point not lost on our Common Law Judges. The decision here effectively takes control for (consumer) moneylending cases away from Parliament. This is highly unsatisfactory, as Section 8 clearly demonstrates. Parliament decided that moneylending law was not an issue for the Common Law Courts - consequently, sole jurisdiction was granted to the County Court as a designated court of competence. Here, where the case was cleverly bundled up as a common law claim by the bank and placed before the High Court, Section 141(2) of the CCA deems the action as "improperly brought" where it was not transferred immediately to the County Court from the High Court, once it was clear to that Court that there was a CCA defence to the common law claim.

  

Lord Crowther's report is a very interesting read indeed. It is highly recommended for anyone who wishes to study this important area of social law.

 

Watch this space:-

 

 

Further applications to the Court(s) to reopen the case are in the pipeline.

 

Please register your support (or otherwise) ! (email address below).  Responses may well be posted.