Debtor Patrick Brophy must pay his credit card bill, following the failure of his bid to overturn a High Court decision dismissing his appeal against a 2009 judgment in the Willesden County Court.
Mr Brophy took his case to the Court of Appeal, alleging that a credit card agreement he signed was unenforceable under the Consumer Credit Act 1974. This claim had been rejected by the lower courts, which ruled that the credit card agreement subsisting between Mr Brophy and HFC Bank (HFC) from 1994 to 2008 was valid and enforceable.
When Mr Brophy applied for the credit card in 1994, the terms and conditions of the agreement were included on the reverse of the application form. Accordingly, it constituted one document for the purposes of the Consumer Credit Act. The form clearly stated that it was a ‘Credit agreement regulated by the Consumer Credit Act 1974’ between HFC Bank Ltd. and ‘you, the customer named below’. The application also stated that ‘You agree that we may make such enquiries and searches and obtain such references about you as we consider appropriate from any person, including any credit reference agency, at any time prior to or during the period of this agreement or whilst monies are owing under it’. The form included a further statement that ‘This is a credit agreement regulated by the Consumer Credit Act 1974. Sign it only if you want to be legally bound by its terms’. The form was duly signed by Mr Brophy.
Mr Brophy argued that there was no intention to create legal relations as there was no certainty as to whether he would be granted credit and, if so, in what amount. It was further argued that the application form was simply an agreement to allow HFC to investigate Mr Brophy’s credit rating and that unless HFC returned a true copy of the agreement stating the credit limit, there was no agreement.
It was held in the Court of Appeal, however, that the purpose of the relevant sections of the application form was to fix the manner in which the credit limit should be determined, not to specify its precise terms. The manner in which the credit limit would be determined in this case was by notification to the debtor. How HFC decided what the limit should be was a matter entirely for itself. By signing and returning the credit card application form, the debtor agreed to accept whatever credit limit the bank chose to allow him. The application form, when executed by HFC, became the agreement under which it made credit available to Mr Brophy. The appeal was therefore dismissed.
“Various attempts have been made over the years to avoid payment of credit card debt by alleging technical breaches of the Consumer Credit Act,” says Richard Forskitt of DFA Law. “That they are almost always unsuccessful suggests that the banks know what they are doing when it comes to drafting and enforcing credit card agreements. Credit card users are best advised to keep credit card borrowing within their means.”