Richard Durkin, an offshore construction surveyor spent £250,000 on legal fees over a laptop fighting a case against HFC Bank who, he claimed, had ruined his credit rating.
Mr Durkin purchased a laptop for £1,499 on 28th December 1998 from PC World. He made it clear that he wanted a laptop with a built-in modem. The shop assistant provided Mr Durkin with a laptop which he thought met his requirements and told him that if it did not, he could return it. Mr Durkin paid a deposit of £50 and completed and signed a credit agreement with HFC for the balance. Mr Durkin returned the laptop the next day when he found that it did not have an internal modem. PC World refused to refund the deposit and cancel the credit agreement.
Mr Durkin subsequently recovered his £50 deposit through the small claims court, when the Company paid without accepting liability.
Mr Durkin, considering that he had also rescinded the credit agreement, did not make payments to HFC. When HFC chased him for payments and when he refused to pay on the basis that the contract had been rescinded, they informed the UK credit reference agencies that Mr Durkin was in default of his obligations under the credit scheme.
In 2004 Mr Durkin took proceedings against DSG Retail, which traded under the name of PC World, amongst others and HFC for a declarator that the contract for sale and the credit agreement had been validly rescinded. He also claimed damages of £250,000. His action was successful and he was awarded damages of £116,674.
Mr Durkin appealed against the assessment for damages and HFC cross-appealed. Mr Durkin’s appeal failed and HFC was able to persuade the court that even though Mr Durkin had rescinded his contract of sale, he was not entitled to rescind his credit agreement as it was a separate agreement.
On appeal to the Supreme Court, Lord Hodge found that Mr Durkin was entitled to rescind the credit agreement as the agreement was a regulated consumer credit agreement and a ‘debtor-creditor-supplier’ agreement. As a consequence, the consumer contract was tied to the particular sale transaction and is automatically rescinded if the sale contract is rescinded. It was found that HFC was under a duty of care to take steps to verify that this was the case before making the report to the credit agencies. The Supreme Court’s powers are limited to ruling on issues of law and therefore were only able to restore the Sherriff’s award of damages in respect of his injury to his £8,000 credit. The issues relating to the other aspect of his claim to include the extra interest and capital gain on the house he intended to purchase had been determined based on findings of fact and were therefore outside the Court’s jurisdiction.
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