In 1998 Mr Durkin bought a laptop for £1,499and took it home in a sealed box. He was assured that the laptop would contain an internal modem, presumably a rarity in those dark ages. He paid a deposit of £50 to PC World and signed a credit agreement for the balance with HFC Bank which provided PC World’s in-store finance.
In fact it did not have the promised internal modem. He went back to the store and asked for his money back and cancellation of the credit agreement, without penalty as he had been promised. The £50 was eventually returned by PC World, but HFC said he was still required to make loan repayments under the terms of the separate credit agreement he had signed. Because of his unwillingness to pay, the Bank marked his credit record as a defaulting customer.
Mr Durkin took his case to court claiming that he was wrongly credit blacklisted for failing to comply with the credit agreement, and as a consequence had been unable to raise a loan to buy a family home.The Sheriff court agreed with him, that he was entitled cancel both the sale and the credit agreement, and awarded him substantial damages for the losses flowing from his inability to borrow.
The Bank appealed and in 2010 Scottish appeal judges held that “the contract of sale and contract of loan were separate agreements.” and that he was not entitled to cancel precisely the sort of in-store credit agreement on which many individuals, and the whole economy(!), rely.
Mr Durkin took his case to the Supreme Court seeking a six-figure sum., and has today won a famous victory. Of sorts.
Though the court agreed that he was entitled to rescind the credit agreement, a major boost for consumer rights, his damages were limited to the direct injury to his credit rating which they assessed at £8,000. That is way short of the amount claimed and little reward for the substantial time and costs poor Mr Durkin has had to put in.
The decision highlights what happens when customers, through dissatisfaction with the financed product, return it to its place of supply. It also highlights the risks banks face when following procedures in relation to credit reporting.
Although the case is Scottish in its origin, the Supreme Court’s judgment enables the ruling to be applied in an English, as well as Scottish, context.
If you have any questions or would like more information, please contact a member of the Commercial Dispute Resolution team at Blacks.