SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT ABERDEEN

 

A187/04

 

 

JUDGMENT

 

of

 

SHERIFF J K TIERNEY

 

 

 

in the cause

 

 

 

RICHARD DURKIN

 

 

 

 

 

Pursuer

 

 

 

against

 

 

 

DSG RETAIL LIMITED and HFC BANK PLC

 

 

 

 

 

Defenders

 

 

 

 

Act: Beynon, Advocate

Alt: McCallum, Solicitor

McShane, Advocate

 

 

 

 

ABERDEEN, March 2008.

 

The sheriff, having resumed consideration of the cause, Finds in Fact:-

 

1.      The pursuer lives in Aberdeen and lived there in 1998/1999. Thereafter until March 2003 he lived partly in Spain and partly in Aberdeen . In about March 2003 he lived in rented property close to Marbella on the Costa del Sol in Spain. He is and was at all material times an offshore construction surveyor in the oil and gas industry. He works throughout the world. He is highly literate in respect of computers which he uses for his employment and also for recreation. When working offshore he takes a laptop or notebook computer with him.

 

2.      The first defenders are a large retail company one of whose retail outlets is the nationwide store known as PC World. This shop specialises in the sale of computers and associated equipment. They have and had in 1998/99 a store in Aberdeen.

 

3.      The second defenders are a bank which provides credit facilities to purchasers buying computers or equipment from the first defenders.

 

4.      In December 1998, the pursuer decided to purchase a new laptop computer. He had certain technical requirements as to the capability of this computer and one specific hardware requirement, namely that the computer should have an internal modem. A modem is the means by which a computer can connect through the telephone system to the internet. .

 

5.      The pursuer had no interest in acquiring a laptop computer unless it had an internal modem.

 

6.      On or about the 28th December 1998, the pursuer visited the first defenders' retail unit, known as PC World, at 1 Berryden Road in Aberdeen for the purpose of purchasing the computer he wanted. He met a member of the management of the first defenders, Andrew Taylor, and explained his requirement to him. Mr Taylor arranged for an assistant, Robert Slorance, to deal with the pursuer. The pursuer immediately made known to Mr Slorance his fundamental requirements relating to the specification of the computer and the need for an inbuilt modem.

 

7.      In the course of the transaction, which lasted about an hour, Mr Slorance identified a Hitachi 23T laptop computer (hereinafter "the laptop") as being a laptop which met the pursuer's specifications, but in respect of which he could not be sure whether it had an inbuilt modem.

 

8.      The laptop was in a sealed box with technical information printed on the outside, which information was inconclusive as to whether the laptop had an inbuilt modem or not.

 

9.      The only way in which the existence or otherwise of the modem could be ascertained was by removing the laptop from the box and operating it. The first defenders' policy did not allow this to be done prior to the customer having concluded his purchase. Mr Slorance indicated to the pursuer that he could not unequivocally state whether or not the laptop had a modem. He suggested that the pursuer should buy the laptop but if, on taking it home and operating it, he ascertained that it had no modem he could return it.

 

10.  The pursuer purchased the laptop. He did so on the basis that it contained an internal modem but that, if that turned out to be incorrect, he could return the laptop and rescind the bargain.

 

11.  The pursuer completed the purchase of the computer, signed the necessary documentation, paid a sum of £50 towards the price, and signed a credit agreement with the second defenders to fund the balance of the purchase. The amount of the credit afforded to the pursuer by the second defenders was £1,499. Mr Slorance acted on behalf of the second defenders in having this documentation completed by the pursuer and signed it on behalf of the second defenders. No individual from the second defenders was a party to any of the transactions at the first defenders' store, or had any dealings with the pursuer in respect of them Due to the lateness of the hour when the pursuer and the first defenders had completed the transaction for the purchase of the laptop and the pursuer had signed the credit agreement documentation provided to him by Mr Slorance on behalf of the second defenders, the paperwork in respect of that transaction could not be completed on that date and bears the date 29th December 1998.

 

12.  The pursuer then removed the laptop as his property at or about 5 pm on the 28th December. The laptop did not have an internal modem. The pursuer ascertained this as soon as he took it home and attempted to operate it on the internet.

 

13.  The following day, namely on or about 29th December 1998, the pursuer attended at the first defenders' store premises in Aberdeen at or about 9 o'clock. He rejected the goods as being disconform to contract, rescinded the contract, and sought repayment of the £50 he had paid and cancellation of the credit agreement.. He dealt with Mr Andrew Taylor. Mr Taylor refused to accept the pursuer's rejection of the goods and did not take any steps in respect of repayment of the money or cancellation of the credit agreement.

 

14.  The pursuer left the laptop in the custody of the defenders and left the store.

 

15.  The pursuer then went to work offshore and returned approximately two weeks later. On his return he found that the first defenders had delivered the laptop back to his home. He then again returned it to the first defenders. He made no payments to the second defenders in respect of the credit agreement.

 

16.  In or about February 1999 following a request for payment from the second defenders the pursuer telephoned the second defenders, advised them that he had rejected the laptop and had rescinded the contract with the first defenders. He intimated to the second defenders that he rescinded the credit contract he had with them

 

17.  On 8th March 1999 the pursuer wrote to the first defenders (5/4/1) confirming that he had rejected the laptop and seeking repayment of the sum of £50..

 

18.  Thereafter in March 1999 the second defenders telephoned the pursuer and required him to make payment under the agreement he had entered into with them. The pursuer explained to them that the laptop had been rejected as disconform to contract and that he had terminated the contract with the first defenders and returned the laptop to them and that he would not pay any money to the second defenders.

 

 

19.  On 22nd July 1999 the second defenders wrote to the pursuer (5/4/2) stating that if he failed to resume payments under the credit agreement possible consequences included the matter being reported to national credit reference agencies, and the pursuer having difficulties in the future in obtaining a mortgage or other credit.. The pursuer responded by telephone reaffirming his position as set out in finding in fact 16 and 18. Thereafter the second defenders issued a default notice to the pursuer and caused entries to be made in the registers of Experian Ltd and Equifax Ltd, the two largest UK credit reference agencies to the effect that the pursuer was in default of his obligations to the second defenders under the credit agreement, said alleged default being said to have commenced on 14th January 1999.

 

20.  Between the appearance of the entries in the registers and 2003/04 the pursuer telephoned the second defenders repeatedly and sought to persuade them to remove the adverse notices, but without success. He was told by the representatives of the second defenders to whom he spoke that he should sort matters out with the first defenders

 

21.  The second defenders did not make any inquiry into the pursuer's assertions that he had been entitled to and had rescinded his contract with the first defenders.

 

22.  On 16 February 2000 the pursuer registered a notice of correction with Equifax (No, 5/2/3 page 5). He also intimated a correction to Experian. This had no effect on his ability to obtain new credit. He telephoned both credit agencies on a number of occasions and was told that only the second defenders could remove the entry. The entries remained on the registers until approximately 2005/2006.

 

23.  In the period prior to January 1999 the pursuer was in the habit of funding or partially funding his lifestyle, including purchasing items and borrowing money, by credit cards. He then routinely made use of the 0% interest free credit on transferred balances which was at all relevant times available from many financial institutions in the UK. This involved the pursuer in transferring a debt due by him to one credit card company to another such company which would offer to charge no interest on the balance so transferred for a specified period of time, typically 9 months to a year. The pursuer would be charged a one off fee by the transferees, typically 2% of the balance transferred. He would be required to make a monthly payment of approximately 1.75 to 2% towards the capital outstanding and he would pay interest on all new purchases made during the life of the card. No later than the end of the interest free period the pursuer would transfer the outstanding balance together with the balance due on new purchases to another credit card provider offering 0% interest on transferred balances. This process required financial discipline on the part of the pursuer as if he failed to transfer the balance at the end of the credit free period this would result in him incurring high interest rates. The commercial benefit to the financial institutions lay in the fact that the majority of customers did not exercise the necessary discipline, did not transfer their balances out of the 0% account at the end of the credit free period, and accordingly incurred the high interest charges. There was no limit on how much someone such as the pursuer could accrue as debit balances other than (a) the requirement that the initial transfer fee and thereafter the minimum monthly balance be paid and (b) the borrower retaining his good credit rating so that his applications for new cards were acceptable to the financial institutions.

 

24.  Each transfer would be conditional on the new lender obtaining a satisfactory credit rating in respect of the pursuer. The overriding criterion for such a rating was that the individual continued to meet his financial obligations. Whether an individual was or was not meeting his obligations was ascertained by reference to the credit registries and in particular Experian and Equifax.

 

25.  The immediate consequence of the entries in the registers was `that the pursuer was unable to open new accounts with credit card companies and other lending institutions. He was unable to utilise the 0% transferred balance procedures. He was only able to continue using the credit card accounts he already had and required to pay interest on these accounts. He was` also able to continue to borrow money from his existing mortgage provider (Northern Rock) on the basis of the security he had already granted to them.

 

26.  The total amount of interest paid by the pursuer over the period from mid 2001 to the end of 2005 is £9926. which figure falls to be reduced to £8600 to take into account the savings made by the pursuer in respect of the 2% transfer charge and further falls to be reduced by the amount of interest on current purchases contained in that total. This amount is reasonably stated at 20% of the interest paid which reduces the figure further to £6880 which fairly states the amount of loss sustained by the pursuer as a consequence of his inability to continue to transfer into 0% accounts

 

27.  From 1998 to date the nature of the pursuer's work abroad has entitled him to be treated as a seaman and therefore as exempt from UK Income Tax.

 

28.  In the autumn of 2003 the pursuer decided to purchase a property in Spain with the intention of living there with his fiancι (now his wife). He identified a house in a new housing development in Malaga, namely Unit 14 Reserva del Hegueron, which he wished to purchase. The basic price of the property was €281274. He made preliminary inquiries about purchasing the house and funding the purchase with a Spanish Mortgage. As he was a UK resident for tax purposes he did not qualify for the 95% mortgage available only to Spanish tax residents for purchasing property in Spain. He did qualify for a Spanish non tax resident's mortgage of 70% of the price of a Spanish property and would have had no difficulty in obtaining such a mortgage. In addition to the 30% balance of the price of the house the pursuer would also have required to pay 7% of the price in respect of VAT (€19690) plus 6% of the price for fees and outlays (€16876). The total cost of acquiring the property would therefore have been 113% of €281274, namely €317840. At the prevailing exchange rate of 1.45 €/£ this amounted to £219200.

 

29.  The pursuer could have borrowed €196892 (70% of the basic price) from a Spanish mortgage provider, and would have had to provide €120948 (43%) from other sources. At the prevailing exchange rate of 1.45 €/£ this amounted to £83412.

 

30.  But for the adverse entry on the UK credit agencies the pursuer would have been able to fund the remaining 43% from his UK building society (Northern Rock) and other UK credit sources. The Northern Rock was at the time prepared to advance up to 125% of values secured on UK house property as were other UK mortgage providers. The value of the pursuer's home in Aberdeen at that time is agreed at £65000. He would have been able to borrow up to £81250 in total on the security of that property in 2003/ 2004. His income was such that he would have been able to afford such a mortgage.

 

31.  As a result of the non-availability to him of 0% credit cards the pursuer had funded a number of his purchases since 1999 by borrowing additional funds from Northern Rock on his mortgage account rather than at the higher rates charged by credit card companies. He had borrowed £30000 in June 2001 and £25000 in April 2003. But for these additional borrowings on the mortgage account the amount he owed to Northern Rock in October 2003 would have been £3990. On that balance he could have borrowed £77260 (£65000 x 1.25 = £81250 - £3990 = £77260) from Northern Rock at an interest rate of approximately 6.5%. He could comfortably have funded the balance of the required £83412, namely £6512, from credit cards and/or unsecured loans from his bank.

 

32.  As a consequence of his additional borrowings on the mortgage account his debt to Northern Rock in October 2003 was £46814. He could have borrowed only up to £34436 from Northern Rock in late 2003 to early 2004 at approximately 6.5% leaving a balance of the required £83412 of £48976. He could not afford to fund borrowing at this level at credit card rates of interest or by way of unsecured loans. As a consequence of his inability to borrow sufficient funds he could not afford to purchase Unit 14 Reserva del Hegueron.. But for this inability to borrow sufficient money he would have purchased the property at a price of €281274 at about the turn of the year 2003/04

 

33.  Had the pursuer purchased Unit 14 in 2003/04 it would have increased in value between then and 2006 to the sum, including VAT of 7%, of €584220. That is based on the price it actually sold for in December 2006 . The pursuer would not have benefited from the VAT element of this valuation. The value to the pursuer net of VAT would have been €546000. At 1.45€/£ this is £376550.

 

34.  The difference between the value of the property to the pursuer in 2006 (€544600) and the total cost of buying the property in 2003/04 (€317840) is €226760 or £156386 which represents the starting point for calculating the pursuer's loss.

 

35.  Had the pursuer purchased Unit 14 at the beginning of January 2004 and borrowed €196892 he would have paid interest at about 3.5% per annum over the period to the end of December 2006 to the Spanish lender. This amounts to €20674 or £14257. In addition he would have borrowed £77260 from the Northern Rock at about 6.5% giving him a liability for interest of £15065 over the period. He would have funded the balance of £6512 by credit card or unsecured loan borrowings at about 14 % per annum which would have amounted to £2735 over the period. When he came to sell the property to realise his gain he would have incurred fees at about 6% of the price amounting to €32676 or £22535. As a result of not buying the property he did not have to make these payments and his loss should be reduced accordingly. The savings amount to £54592 leaving a net loss of £101794.

 

36.  As a consequence of the second defenders negligent misrepresentation that the pursuer was in default of his obligations to them the pursuer sustained a general loss to his creditworthiness which is fairly stated at £8000.

 

 

.

Finds in fact and in law:-

37.  It was a material term of the contract between the pursuer and the first defenders for the purchase of the laptop that the laptop should have an inbuilt modem.

 

38.  As the laptop did not have an inbuilt modem, the first defenders were in material breach of said term and in consequence thereof the pursuer was entitled to reject the goods, to treat the contract as repudiated, and to rescind the contract, all of which the pursuer properly did on or about the 29th of December 1998 when he returned the goods to the first defenders.

 

39.  The term of the agreement negotiated between the pursuer and Mr Slorance of the first defenders to the effect that the pursuer could return the laptop if it did not contain an inbuilt modem was no more than a partial statement of the pursuer's rights in terms of Section 15(B) of the Sale of Goods Act 1979.

 

40.  The contract entered into between the pursuer and the second defenders is a debtor, creditor supplier agreement in terms of Section 12(C) of the Consumer Credit Act 1974..

 

41.  The first defenders being in material breach of the terms of the contract between the pursuer and the first defenders, the pursuer was not obliged to make payments under the contract between the pursuer and the second defenders.

 

42.  The first defenders being in material breach of the terms of the contract between the pursuer and the first defenders, the pursuer was entitled to and did validly rescind the contract between the pursuer and the second defender by virtue of the provisions of Section 75(1) of the Consumer Credit Act 1974. The pursuer did this (a) by rescinding the contract between himself and the first defenders and (b) in a number of telephone conversations with the second defenders from and after about February 1999 when he intimated that he was rescinding his contract with the second defenders and further that he would not pay money under the credit agreement by virtue of the first defenders' material breach of contract in having supplied a laptop which did not have an inbuilt modem.

 

43.  Damages are reasonably calculated at £116674

 

Finds in law:-

44.  The first defenders being in material breach of the terms of the contract between the pursuer and first defenders for the purchase by the pursuer of the laptop and the pursuer having rejected the laptop and rescinded the contract the pursuer is entitled to decree of declarator in respect of the contract between the pursuer and the first defender in terms of crave 1(i).

 

45.  The first defender being in material breach of the terms of the contract between the pursuer and first defenders for the purchase by the pursuer of the laptop and the pursuer having rejected the laptop and rescinded that contract and having further rescinded the credit agreement between himself and the second defenders the pursuer is entitled to decree of declarator in respect of the credit agreement between the pursuer and the second defender in terms of crave 1(ii).

 

46.  The pursuer, having suffered loss and damage as a result of the fault and breach of duty of the second defenders is entitled to reparation therefor.

 

 

 

47.  Therefore Sustains the pursuer's first, second, third, fourth and fifth pleas-in-law and Repels the first and second named defenders' respective pleas-in-law; (1) Finds and Declares that the pursuer was entitled to rescind and has validly rescinded (i) the contract of sale between the pursuer and the first defenders dated 28th December 1998 by giving notice to the first defenders on 29th December 1998 and (ii) the consumer credit agreement between the pursuer and the second defenders dated 29th December 1998, by giving notice to the second defenders in or around February 1999; (2) Grants decree against the second defenders for payment to the pursuer of the sum of One hundred and sixteen thousand six hundred and seventy four pounds (£116674) together with interest thereon at a rate and from a date or dates to be afterwards determined; and assigns ............................. at within Aberdeen Sheriff Court as a diet for the hearing on the question of interest and all matters relating to expenses.

 

 

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NOTE:-

 

48.  In this case the pursuer was represented by his counsel, Mr Beynon, the first defenders by their solicitor, Mr McCallum, and the second defenders by their counsel, Mr McShane.

 

49.  The pursuer gave evidence himself and called as witnesses Mr Philip Knott, an associate of the Chartered Institute of Building; Mr David Young, a bank manager with Northern Rock Plc in Aberdeen; Mr Anthony Clark, the principal in a financial services business in Aberdeen and Mr Robert Slorance, an electronics technician who works in California and who had been an employee of the first defenders in 1998/1999. The first defenders called Mr Andrew Taylor who had been one of the management staff of the first defenders' store in Aberdeen in 1998/99 and who still worked with the company elsewhere. The second defenders called no witnesses.

 

50.  The pursuer, Mr Slorance and Mr Taylor, all gave evidence as to the circumstances surrounding the pursuer's purchase of a laptop computer from the first defenders at the end of 1998. These events therefore took place some 8 to 81/2 years before they gave evidence. It is not surprising therefore that the evidence of detail from the witnesses was at times a bit clouded.

 

The Pleadings

51.  The pursuer's position on record is that on or around the 28th December 1998 he entered the first defenders' store in Aberdeen looking to buy a laptop with a built-in modem for internet access. He met Andy Taylor and Robert Slorance, both employees of the first defenders, but most of his dealings that day were with Mr Slorance. Ultimately, with the assistance of Mr Slorance, he decided upon a Hitachi 23T laptop, making it clear to Mr Slorance that a built-in modem was an essential component for him. Mr Slorance was unable to give a categorical assurance to this effect as the specification on the box which contained the laptop was inconclusive. He was unable because of company rules to open the box in which the laptop was contained to find out. The pursuer and Mr Slorance agreed that the pursuer would purchase the laptop, inspect it at home and be entitled to a "no quibble refund" in the event that it did not have an internal modem. On that basis, the pursuer paid £50 towards the purchase price of the laptop and entered into a finance agreement with the second defenders in respect of the balance. The finance agreement was negotiated on behalf of the second defenders by Mr Slorance. The pursuer took the laptop home, tried it out, and immediately ascertained that it did not have an internal modem. He brought the laptop back to the store the next day, saw Mr Taylor and indicated that he was rejecting it because it did not have a modem, and that he was rescinding the contract. Mr Taylor refused to accept the returned laptop, refused to accept that the contract was rescinded, and sought to sell the pursuer an external modem for £90. The pursuer was not prepared to do this. He left the first defenders' premises, leaving the laptop behind in its box. Between then and February 1999, the second defenders demanded payment from the pursuer in terms of the credit agreement. In February 1999, the pursuer told the second defenders by telephone that he had rejected the laptop, the circumstances of that rejection, and that he was rescinding the credit agreement. The second defenders refused to accept the rescission of the credit agreement unless the first defenders accepted the rescission of contract of sale. They continued to demand payment of monthly instalments under the agreement but made no attempt to enforce the agreement. The second defenders caused an entry to be made in two credit reference agencies, Experian and Equifax, to the effect that the pursuer was in default of his obligations under the credit agreement, which was not true. They refused to correct the entries when the pursuer told them his version of the facts, or to investigate the pursuer's version, with the result that the relevant entries remained on the register for about 6 years. This caused loss to the pursuer in respect of his inability to negotiate the use of interest free credit cards and the payment of interest he would not otherwise have had to make, an inability to borrow sufficient funds from his UK building society to fund the purchase of a property in Spain, a loss of profit on the increase in the value of that property and a loss of his creditworthiness. He was not in default of any other financial obligation during the period the notice was on the register. In 2002 he sued the first defenders for payment of the £50 deposit on the basis of his recission of the contract. The first defenders then paid the sum in full but did not admit liability.

 

52.  The first defenders' position on record is that they admit that Robert Slorance dealt with the pursuer at the time of his visit on or around 28th December 1998, that he purchased the laptop, that the pursuer paid a £50 deposit and that he signed a credit agreement with the second defenders. They believe that the following morning or shortly thereafter the pursuer returned the computer to the first named defenders' place of business and that they processed the finance agreement between the pursuer and the second named defenders. They say that Robert Slorance advised the pursuer that the computer which he was interested in purchasing did not have an internal modem and that the pursuer agreed to purchase the computer having been told this. On filling up finance agreement application forms the pursuer again asked Mr Slorance to confirm whether or not the computer had an internal modem. Mr Slorance again advised the pursuer that it did not. They say that the pursuer was not advised at any time that the laptop had an internal modem and that the pursuer purchased it in the knowledge that it did not have such a modem. They say that when the pursuer returned the modem he dealt with Grant Page and not Andy Taylor and that in all the circumstances the pursuer was not entitled to reject the computer. They admit that the pursuer sued them for £50 and that they settled this by paying £50 on an ex gratia basis without admitting liability.

 

53.  The second defenders' position is that they admit that the pursuer signed a credit agreement with the second defender for the purchase of a computer, they believe it to be true that the pursuer returned the goods to the first defender on 29th December and that the first defender refused to accept the goods as rejected and that the pursuer left the computer on the first defenders' premises. They admit that they have demanded payment from the pursuer under the credit agreement, that the pursuer advised them (they say in March 1999) that he had rejected the computer and of the circumstances in which he did so, that they demanded payment of the monthly instalments, and that they did not attempt to enforce the credit agreement. They say that they advised the pursuer that they would insist on payment until the first defenders agreed to accept the return of the goods. They accept albeit not expressly that in accordance with best industry practice they advised the credit reference agencies of the pursuer's alleged default. They say that the pursuer made no call on them to amend the entries. They say that the injury and damage founded on by the pursuer is too remote a consequence of the alleged negligence. They say that esto there was a loss the pursuer failed to mitigate it and failed to make calls on the second defenders to rectify the entries.

 

The evidence

 

54.  The pursuer gave evidence very much in accordance with his pleadings. He struck me as an honest, credible and generally reliable witness He had a very good reason for wanting a computer with a built-in modem, namely convenience and protection from damage and given this desire on his part he had absolutely no reason to accept a computer which did not have such a modem. There would, however, be a good reason for buying the computer and taking it home on the basis that if it did not have such a modem it could be rejected and a "no quibble refund" obtained. He clearly had maintained that position in his letter to the first defenders' managing director on 8th March 1999. He explained the same position to the second defenders in February 1999 and again (having regard to the second defenders' admission in lines 2 to 3 of their answer 3) on or about 5th March 1999. He has lived with the dispute since. He had raised proceedings in 2002 for the return of his deposit on the basis of his rejection of the laptop and raised the current proceedings in January 2004 in which his principal averment in condescendence 2 was to the effect that the then unidentified sales representative had been unable to confirm whether the computer had a modem but advised him that he could purchase the computer that day and that if it did not satisfy his requirements in terms of the modem that he could bring it back and have a "no quibble refund". He has been consistent in his position throughout.. In addition, the evidence of Mr Slorance was on very many matters supportive of the pursuer's position. Mr Slorance was only contacted by the pursuer in November or December 2006. In the intervening 8 years since his dealings with the pursuer he would have no reason to think about the transaction at all. His memory was jolted by the pursuer sending him a photograph of what the pursuer had looked like in 1998/1999 and he remembered the transaction because of the joviality of the pursuer in his dealings with him. This was in contrast to the normal lack of joviality that Mr Slorance had encountered in dealing with commercial customers which was his remit at the time. I found Mr Slorance to be entirely credible although understandably he may not be 100% accurate on all the fine details of what transpired some 9 years ago. I accept him as being both credible and reliable in respect of his assertion that the pursuer specifically required an inbuilt modem, that he could not at the time of sale say whether the laptop had an inbuilt modem or not, that he could not ascertain that matter in the shop, that he proceeded with the sale on the basis that if there was no inbuilt modem the pursuer could return the laptop for a refund. I find him less reliable in his assertion that there was an alternative discussed, namely that a modem could be installed. It was not clear whose option this would be. I prefer the pursuer's evidence on this point that this was not discussed

 

55.  The pursuer explained his credit habits, the fact that he lived a lifestyle that was heavily dependent on a scheme for creating a line of 0% interest on credit cards, achieved by regularly changing his various credit card suppliers and transferring the debit balances from one to another on a regular and disciplined basis. He explained the effect of the adverse credit notices on this, and the money it had cost him in interest payments, and how he had changed his credit lifestyle from the use of cards to the use of secured borrowings from his existing mortgage provider. He explained his intention to buy a house in Spain on a non tax-resident 70% mortgage and how but for his use of his mortgage rather than % rate credit cards he would comfortably have been able to fund the remaining 30% plus 13% VAT and fees from his mortgage account, borrowing up to 125% of the value of his Aberdeen home. He gave evidence relating to the specific house he would have bought had he been able to fund from the UK the 43% of the price he needed, and the profit he would have made. He brought witnesses to speak to property prices in Spain both in 2003 and in 2006, the availability of mortgages in Spain and the UK and the availability of 0% credit cards in the UK. He spoke convincingly of his speaking to the second defenders on many occasions to explain what had happened in his dealings with the first defenders and of his attempts to persuade the second defenders to remove the entries against him. He was cross-examined at length and comfortably defended his position. No evidence was led by the second defenders. I found the pursuer to be entirely truthful and reliable

 

56.  Mr Taylor's evidence was very much in accordance with the first defenders' pleadings. He did not recollect seeing Mr Durkin, the pursuer, when he entered the store, he did not recollect having any dealings with him on the day that the goods were returned by the pursuer. He did, however, have a very clear recollection that on two occasions he had heard Mr Slorance say to the pursuer in unequivocal terms that the computer did not have an internal modem. He also said that he himself had ascertained that the laptop did not have an internal modem. I found his evidence on the statement which he said was made on two occasions by Mr Slorance to the pursuer that the laptop did not have a modem not to be credible. It may well be that he himself knew that the laptop did not have a modem. I can, however, see no possible reason for the pursuer taking home a laptop which he knew unequivocally did not have a modem in it. That would have been an entirely pointless exercise given what both the pursuer and Mr Slorance said had been the pursuer's absolute requirement in respect of the inbuilt modem.

 

57.  Accordingly, I have had no difficulty in finding that the pursuer's evidence on this crucial matter is to be preferred both where it differs from that of Mr Taylor and where, perhaps less importantly, it differs from that of Mr Slorance. Having regard to Mr Taylor's lack of credibility on such a crucial matter I do not feel I am able to accept any of his evidence except when it coincides with the pursuer's evidence.

 

58.  The first defenders' case on record in respect of the rescission of the contract is that they believe that on the morning of the 29th of December or shortly thereafter the pursuer returned the laptop to their place of business. They believe that at that time the pursuer spoke to Grant Page and not Andy Taylor. They admit that the pursuer wrote to them on 8th March, averred that they replied to him and incorporate that reply in their pleadings. The pursuer's letter of 8th March 1999 (No. 5/4/1 of process) indicates an involvement on Mr Taylor's part at the time of the return of the goods. It is not, however, clear that the pursuer is saying in that letter that he dealt with Mr Taylor on the 29th December and that it was Mr Taylor who refused to accept the rejection of the goods and the rescission of the contract. I therefore do not accept that any adverse inferences can be drawn from Mr Taylor's letter of 13th April in which he makes no reference to his involvement on that date but does point to the involvement of Mr Grant Page. Mr Page was on the first defenders' list of witnesses but was not called. Mr Taylor's position in evidence was that he had no recollection of speaking to Mr Durkin on the 29th of December 1998. I do not consider that it is very important who Mr Durkin spoke to when he returned on the 29th of December 1998. I do, however, accept his evidence that he did return on that day, that he did speak to Mr Taylor, that he rejected the laptop and that he rescinded the contract.

 

Submissions

59.  So far as the merits were concerned, counsel for the pursuer's submissions were made under four headings namely:- (i) Whether the pursuer's contract of sale with the first defenders contained the express term contended for; (ii)Whether that term was breached, i.e. whether the pursuer was entitled to reject the laptop when he contends that he did; (iii)Whether the case of fault against the second defenders based upon negligent misrepresentation has been established; and (iv)Whether the pursuer's case against the second defender based upon Sections 12(B) and 75 of the Consumer Credit Act of 1974 had been established.

 

60.  In support of the first he submitted that the evidence of the pursuer should be regarded as credible and reliable and preferred, where there was any difference, to any other witnesses; he submitted that the pursuer's position was inherently plausible as to the need for an internal modem given his obvious IT literacy, and his lifestyle at the time, namely travelling and working abroad; he submitted that the pursuer's substantive position was corroborated and supported by the witness Robert Slorance whom he regarded as neutral; and he submitted that the letter from Andrew Taylor, No. 6/1 of process accepts that the pursuer had been questioning Mr Slorance at the time of the contract as to whether a modem was or was not included. He submitted that it was simply incredible for the defenders to maintain that the pursuer was not insisting upon this requirement and had not reached an agreement about it with Mr Slorance. On the balance of probabilities, counsel said, the pursuer had clearly established that the contract of sale with the first defenders was subject to the express term contended for. As to whether the pursuer was entitled to return the laptop and treat the contract of sale at an end, counsel founded upon Section 15(B) of the Sale of Goods Act, saying that if the pursuer succeeded in the first issue then he inevitably succeeded on the second.

 

61.  So far as the case based on negligent misrepresentation was concerned, counsel submitted that the entry in the Equifax register constituted a relevant statement which continued whilst the entry was maintained until the end of 2005; he said that if it is accepted that the pursuer was entitled to have returned the laptop then the statement must be regarded as false and incorrect; he submitted that the second defenders knew or should have known that the statement was false, there was no evidence that they carried out any investigations, had they made any reasonable enquiry it would have shown that the issue of the internal modem had been raised at the point of sale and that the pursuer's position was supported by one of the defenders' employees namely Mr Slorance; and that in all the circumstances any reasonable person would have concluded that the pursuer's assertions were likely to be correct; he further submitted that it was reasonably foreseeable at the time the statement was made that if it was made damage would result, he considered this to be a straightforward issue and referred to the second defenders' own letter (No. 5/4/2 of process) specifying that in the event of the default being continued the pursuer would have difficulty in obtaining further credit including borrowing money for a house purchase, and finally on this matter he submitted that there was sufficient proximity between the pursuer and the second defender arising out of the contractual relationship.

 

62.  He submitted that the pursuer's case against the second defender under the Consumer Credit Act provisions had been established. The agreement between the pursuer and the second defenders was a debtor-creditor-supplier agreement falling within Section 12(B) of the Consumer Credit Act 1974.

 

63.  Section 75 of the Act provides:- "If the debtor under a debtor-creditor-supplier agreement falling within Section 12(B) or (C) has in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor who with the supplier shall accordingly be jointly and severally liable to the debtor". He submitted that I should follow the approach and reasoning contained in the case of United Dominions Trust v V Taylor 1980 SLT (Sh.Ct) 28. He said that his essential submission was that if the pursuer was entitled to bring the sale agreement to an end then he must also be entitled to have done likewise with the consumer credit agreement. If the contract of sale was properly and validly brought to an end then the second defenders cannot have been entitled to have treated the pursuer as in default of the consumer credit agreement until the end of 2005. Such conduct was wrongful and gave rise to a claim in damages.

 

64.  The solicitor for the first defenders submissions were directed to crave 1(1) of the writ. He submitted that the first question that needed to be answered was what was agreed at the time of sale, and that this question required to be answered in the context credibility and reliability of the three witnesses. He submitted that Article 2 of condescendence narrated the basis on which the transaction had taken place, namely that it was part of the contract that the pursuer would be able to return the laptop the following morning for a "no quibble refund" in the event that it did not have a modem. This was different from the averment right at the start of condescendence 4 to the effect "it was an expressed term of the contract of sale between the pursuer and the first defenders that the computer would have an internal modem". He said there was a difference between the two. He accepted that if the first defenders' employee had said "Here is a Hitachi, it has a modem" that would be capable of giving rise to a breach of contract under Section 15(B) of the Sale of Goods Act, but that was not what was actually agreed. According to the evidence of Mr Slorance, what was agreed was that the pursuer could take the computer away and, if it did not have a modem, he could bring it back and obtain a refund or a replacement or have a modem fitted.. That was quite different from it being an express term of the contract of sale that the computer did in fact have a modem. It was a concession that it might not and it set out what the defenders were willing to do if it didn't. Accordingly, the pursuer was not entitled to reject the goods in terms of the contract, and therefore not entitled to rescind the contract.

 

65.  He referred to the three principal witnesses, the pursuer, Mr Slorance and Mr Taylor. He described the pursuer as having an adventurous and cavalier approach to his finances although clearly a very persistent man. He referred to the pursuer's categorisation of Mr Taylor as a bad man as indicating that the pursuer may have coloured his evidence in certain ways because of this perception. He pointed out that Mr Slorance did not support the pursuer in every way and made some reference to the amount of communication between the pursuer and Mr Slorance prior to the pursuer arranging for Mr Slorance to come to give evidence. He referred to the technical note (No. 5/4/3 of process) which contained in Mr Slorance's handwriting a note which, according to his evidence, Mr Slorance did not consider accurate. At the end of the day, however, Mr Slorance's evidence supported the position that no assurance had been given that the laptop had an internal modem. Mr Slorance's evidence, when analysised, didn't really help the pursuer's case. The three questions were "What was the deal? Was there a breach? And was there a right to reject?" Finally, he commended Mr Taylor's evidence as being confident, unembellished, credible and reliable. That evidence was to the effect that there had been a clear statement made by Mr Slorance to the pursuer on two occasions that the computer did not have a modem.

 

66.  Counsel for the second defender adopted the solicitor for the first defenders' submissions on the issue of Section 15(B) of the Sale of Goods Act.

 

67.  So far as the pursuer's case against the second defender based on negligent misrepresentation was concerned he submitted that the pursuer must prove three elements namely:- (i)a lawful rescission of the contract with the first defenders; (ii)a lawful rescission of the credit agreement with the second defenders, and (iii) a negligent misrepresentation resulting in loss.

 

68.  If the pursuer failed in respect of either (1) or (2) he necessarily failed on (3). Further, the pursuer could succeed in respect of the contract of sale and fail in respect of the consumer credit contract. The pursuer could prove lawful rescission of both contracts and still fail to establish a relevant case of negligent misrepresentation.

 

69.  So far as the contract for the purchase of the computer was concerned in addition to the submissions made on behalf of the first defenders he said that there was no express term in respect of the modem or, if there was, there was not one which the pursuer pled. He submitted that whilst there had been evidence given by the pursuer that he had rescinded the contract for the purchase there was no evidence that he had intimated rescission of the credit agreement.. He referred to Section 68 and 69 of the Consumer Credit Act, which deal with cancellation of the contract, pointing out the pursuer had never relied on this. He also referred to Section 189(1) of the Act which provides that "A notice" means "Notice in writing". He referred to the evidence which the pursuer had given in respect of the two telephone conversations in March and in July of 1999 wherein the pursuer had described the dispute with the first defenders and the rejection of the goods, but in neither of them had he spoken to rescinding the consumer credit agreement.

 

70.  The documentation which had been lodged by the pursuer in support of the claim for interest paid was at best incomplete. The entries from the credit card accounts were selective. In addition, the premise upon which the pursuer proceeded, namely that all of the interest which he paid would have been on a zero per cent basis was not supported by the evidence as to how the zero per cent schemes worked. He referred to the evidence of the pursuer himself and to the evidence of Mr Clark. It was apparent the balance transferred from one credit card to another which attracted zero per cent rates. Any purchases made on a credit card would attract interest. In addition, if the pursuer was transferring credit card balances there would be a fee, usually two per cent, which would be added to the balance and in due course that would have had to been paid by the pursuer making transfers he save the transfer fee of two per cent. The pursuer had accordingly failed to prove exactly what his alleged loss was. The pursuer had put forward no calculations which would assist in making the proposed finding in fact.

 

71.  So far as the house in Spain was concerned, counsel for the second defenders said that there were two issues to be addressed, namely remoteness and causation. He referred to Symons v British Steel 2004 SC HL 94 and in particular paragraph 60. Lord Rodger sets out the lines to be taken into account in approaching any question of remoteness of damage once liability has been established. The first of these, and Lord Rodger's starting point is that the defender is not liable for a consequence of a kind which is not reasonably foreseeable. The pursuer's case was that the second defender should have foreseen that the pursuer would accrue credit card balances, have to remortgage his house and so be unable to fund the purchase of another house in Spain. He relied on production 5/4/2, being the letter from the second defenders advising the pursuer he may have trouble in obtaining a mortgage. He submitted that the pursuer in fact had no problem obtaining a mortgage in the UK, the problem was what he was using it for. He suggested that the link to the lack of ability to buy a house in Spain was very tenuous and not foreseeable. The chain of events in the pursuer's case was too much to be reasonably foreseeable.

 

72.  Turning to the question of causation, he submitted that the pursuer had not proved a link between the alleged misrepresentation and his loss. He submitted that there was no credible evidence to support the pursuer's assertion that he would have attempted to purchase the house by means of obtaining a thirty per cent deposit. He said that the best that the pursuer did was consult someone with a view to applying for a mortgage. He hadn't applied for a non-resident mortgage in Spain. The only evidence that there was, was of a letter indicating an intention to apply for a ninety five per cent or residence mortgage in Spain. The proposed purchase had not got off the ground. The pursuer offered to prove that he would have purchased the property with a seventy per cent non-resident loan but had not done so. He had taken no steps to get a seventy per cent mortgage. There were gaps in the evidence, the pursuer had displayed a lack of candour. He pointed out to some of the pursuer's evidence in cross-examination which indicated that his finances were more extensive than he had let on in his examination in chief. There were gaps in the bank and credit card statements that he had produced. He submitted that if the pursuer could not show the precise extent of his personal finances and that it fell short of the thirty per cent of the purchase price he should not succeed.

 

73.  He referred to the case of McWilliam v Sir William Erroll & Co 1962 SC HL 70, a personal injury case, where it was held that the onus was on the pursuer to establish not only breach of duty on the part of the defender but also the causal connection between the breach of duty and the accident, the need identified by the Lord Chancellor (Viscount Kilmuir) to establish the effective cause, and that this must be identified from the examination of all the relevant circumstances. The failure by the pursuer to provide a full financial picture meant that his assertions could not be tested. It could not be said whether the pursuer had proved that the effective cause was the wrong doing of the second defender, rather than the peculiar nature of the pursuer's personal finances. Counsel submitted that the principal cause for the pursuer not buying the house in Spain was that he did not apply for a mortgage to fund that purchase, either in Spain or in Scotland.

 

74.  Next he referred to the evidence from the pursuer's own witness, Mr Clark that in fact with proper financial advice and planning the pursuer could have afforded to buy the property in Spain by means of a non resident's mortgage of eighty five per cent and the re-mortgaging of his house in Aberdeen to a level of one hundred and twenty five cent of value. If he could have afforded the deposit there was evidence that he would have had no problem in obtaining the balance with a non resident Spanish mortgage. Mr Clark spoke from personal knowledge and did not know anyone who had purchased a house in Spain and paid more than a twenty per cent deposit. He, and six colleagues, had bought fourteen houses (two each) and paid a deposit of fifteen per cent arranged through their English solicitor's practising in Spain. I should accept Mr Clark's evidence. The arithmetic clearly operated to show that there was sufficient equity in the pursuer's UK property for him to make the deposit if it was restricted to fifteen per cent.

 

75.  There was no evidence that he had taken any of the appropriate steps to arrange finances along the lines that Mr Clark had suggested. He may have been badly advised, but that would interrupt the causal chain. The bad advice amounted to novus actus interveniens. It was not the pursuer's fault he had been badly advised, but he could have afforded to buy the house and accordingly there simply was no loss. Finally, he had submissions to make in respect of the arithmetical valuation of loss on the house if I was against him in respect of the other matters.

 

76.  On the question of mitigation of loss he referred to the statutory procedures available to the pursuer to attempt to have the register rectified and said that he had failed to utilise them.

 

77.  Counsel for the pursuer, in reply, on the issue of the express term on the contract said that the position adopted by both defenders was too narrow. The central point was that the pursuer insisted throughout that the laptop had to have an internal modem. It didn't and therefore Section 15(B) of the Sale of Goods Act applied. The condition relating to the modem was a material term and the failure to provide a laptop with a modem was a material breach giving rise to a right to reject the goods and rescind the contract.

 

78.  So far as the argument based on Section 75 of the Consumer Credit Act was concerned, the second defenders admitted in Answer 3 that the second defenders demanded payment of the monthly instalments due under the credit agreement, and that the pursuer had refused to pay them, and the pursuer advised the second defenders of his reasons for returning the goods to the first defenders. The only proper conclusion was that the contract was being brought to an end because the pursuer was entitled to claim the right of rescission. Section 75 provided a sui generis remedy. He referred to the essential submission on page 16 of his written submissions namely "If the pursuer was entitled to bring the supply agreement to an end then he must have been entitled to have done likewise with the Consumer Credit Agreement. If the contract of sale was properly and validly brought to an end then the second defenders cannot have been entitled to have treated the pursuer as in default of the Consumer Credit Agreement until the end of 2005".

 

79.  On the issue of remoteness, he submitted it was not necessary to foresee the precise chain of events, there was enough to establish that it was foreseeable that the pursuer would suffer an inability in obtaining credit. He submitted that the underlying reasoning in the case of King was that there was an injury to credit whether or not there was an actual inability to get credit in any given circumstances. He submitted that the second defenders' approach was far too pernickety. The simple position was that the pursuer had previously had a decent credit record and no contrary evidence had been led.

 

80.  So far as the credit card loss was concerned, he said that there was an inevitable degree of a broad approach which was needed. The second defenders' position was again too specific. The simple fact on the pursuer's evidence is that he would have applied for interest free credit he would have obtained it and he would have "played the game". Mr Clark supported this position.

 

81.  So far as the Spanish property was concerned, he submitted that I should prefer the evidence set out in the Green Independent letter saying that a thirty per cent deposit was required for a non-resident mortgage. The expert witness, Mr Knott was able to help in this regard.

 

Decision

Rescission - the sale agreement

82.  Standing the view I take of the credibility and reliability of the pursuer and Mr Slorance as against that of Mr Taylor I find that the first defenders were in material breach of their contractual obligation to the pursuer to provide him with a laptop with an inbuilt modem, that this was a material breach of contract and that the pursuer was entitled to rescind his contract with the first defenders. I also accept that he did in fact rescind the contract when he returned to the PC World store the following morning, handed over the goods, sought the repayment of his deposit and refused to take the goods away. Leaving the goods with the first defenders in the circumstances which pertained was, in my opinion, a clear intimation of rescission of that contract whatever words were used. It follows therefore that the pursuer is entitled to decree against the first defenders in terms of crave 1 (1).

 

Rescission - the credit agreement

83.  So far as the contract with the second defenders is concerned as I have said I accept the pursuer's uncontradicted evidence that he told the second defenders in a telephone call in early 1999 that he was terminating his credit contract with them. The second defenders' submitted that the pursuer was not entitled to found, as he specifically did, on Section 75 of the Consumer Credit Act I consider that the wider interpretation of Section 75(1) contended for by the pursuers is to be preferred. The word "claim" can have range of meaning but essentially means the assertion of a right. What Section 75(1) specifically provides is that if a debtor has, in relation to a transaction financed by a debtor/creditor/ supplier agreement, "any claim against the supplier in respect of a misrepresentation or breach of contract he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor."

 

84.  I respectfully agree with the opinion of Sheriff Principal Reid in the case of UDT v Taylor 1980 SLT (Sh.Ct.) 28 where he says, at the bottom of page 30, "The subject matter of the section is "any claim against the supplier in respect of a misrepresentation or breach of contract". The claims which leap to mind as being open in these circumstances are claims to rescind the contract, to claim restitution of any sums paid to the supplier and to claim any damage which the debtor has sustained. It would be odd, to say the least, if the right to rescind was not available against the creditor and the right of restitution, which depends on rescission, was available. The section goes on to provide that, where such claims against the supplier exists, the debtor shall have "a like claim against the creditor". This section does not require that the claim against the creditor shall be justifiable on the like grounds to the claim against the supplier, merely that it shall be the same sort of claim. The words "a like claim" are thus wide enough to include a claim for rescission although the creditor has given no grounds for rescission of the loan contract".

 

85.  The learned Sheriff Principal went on to consider the other provisions of the Act which related to debtor/creditor/supplier agreements finding that a reading of the Act disclosed that it had created:- "a completely new system of classifications and remedies to take effect whenever consumer credit is associated with the contracts of sale and hire. These statutory remedies have been superimposed on existing contractual remedies. One of the innovations of the Act is to treat two or more contracts which are economically part of one credit transaction as transactions which are legally linked. Where these linked transactions contain two contracts the fate of each contract depends on the other, even where the parties to the contracts are different. This approach leaves no room for the idea of privity of contract which is fundamental to the common law of contract." He went on, in the final paragraph of the report, to conclude that the contract in that case was a "linked transaction" in terms of Section 19 of the 1974 Act. The effect of this having regard to Section 69 of the Act was that withdrawal from the credit agreement operates as withdrawal from the contract of sale, and cancellation of the credit agreement has a similar effect on the contract of sale (Section 57(1) and Section 69(1)). He concluded, at the end of his judgment:- "In precisely the same way, Section 75(1) ensures that rescission of the contract of sale shall operate as rescission of a credit agreement linked to it where both form part of a debtor/creditor supply agreement." I accept the learned Sheriff Principal's analysis and conclusions and accordingly, for these reasons alone, would be satisfied that the rescission by the pursuer of his agreement with the first defenders operated as a rescission of the credit agreement.

 

86.  So far as intimation of that rescission is concerned, in a case where the contract was entered into on behalf of the second defenders by the first defenders there does not seem anything wrong in principle with treating the intimation of the rescission of the first contract to the first defenders by returning the goods and demanding return of his deposit, as amounting to intimation to the first defenders in their capacity as agents for the second defenders in respect of the transaction which they had, just the night before, entered into on behalf of the second defender. The only purpose of the credit agreement was to provide funds to the first defender to fund the purchase of the laptop by the computer, which purchase had immediately been rescinded. The pursuer had no need for the money as the sale no longer existed.

 

87.  The holding of the creditor as similarly liable to the purchaser as the seller is seems to me to be entirely consistent with the scheme of the Act. Section 56(1) of the Act provides that in the case where antecedent negotiations were conducted by the supplier in relation to a transaction financed or proposed to be financed by a debtor/creditor supplier agreement, negotiations with the debtor shall be deemed to be conducted by the negotiator in his capacity as agent of the creditor as well as in his actual capacity. This clearly has the effect of treating the specific term negotiated between the pursuer and the first defenders into the contract for the purchase of the laptop, namely that it had an internal modem, as equally negotiated into the credit agreement to the effect that the laptop the purchase of which was to be financed by the second defenders would have an inbuilt modem. This turned out to be a misrepresentation justifying rescission.

 

88.  Section 56 does not appear to have been cited in the argument before Sheriff Principal Reid, and indeed it was not cited in the argument before me, but its provisions seem to support the general scheme of linked transactions which he found, and his interpretation of the definition of claim in terms of Section 75(1).

 

89.  It may very well be that the pursuer's claim could have been brought on the basis of Section 56 without reference to Section 75 at all. That does not, however, preclude a claim being brought in terms of Section 75(1). Although the pursuer both in his pleadings and in his submissions founded only on Section 75 I consider that Section 56 has a relevance as explaining the wider statutory circumstances in which the pursuer claims to have rescinded his contract with the second defenders. Although Sheriff Principal Reid referred to the lack of grounds for rescission of the loan contract it may well be that Section 56(2) provides such grounds. Even if it does not, however, I am satisfied for the reasons given by Sheriff Principal Reid under Section 75(1) alone that the pursuer was entitled to and did rescind this second contract.

 

90.  So far as intimation is concerned, I have already indicated that I consider that in the circumstances of this case intimation of rescission of the loan contract was properly made by intimation to the first defenders as the second defenders' agents of rescission of the first contract, and that this operates as sufficient intimation to the second defender, if such intimation be needed. I should also say, however, that I accept the evidence of the pursuer that he told the second defenders that the goods did not conform to contract, that he had rescinded the first contract and that he wasn't paying anything under the loan contract. This is admitted to a considerable extent by the second defenders in Answer 3 and I accept the pursuer's evidence on the point. The fact that the second defenders intimated to the pursuer that they continued to insist on him honouring his obligations under the loan contract is neither here nor there. If the pursuer was not obliged to make payment under the contract the second defenders' attitude counts for nothing.

 

91.  The second defenders also submitted that Section 69 provided that an agreement could be cancelled by the debtor by notice, and that Section 189, the definition section, provided that "notice" meant notice in writing. In fairness to counsel for the second defenders he described this as a technical argument and perhaps did not give a great deal of weight to the point. It can, however, in my opinion, be shortly dealt with. Section 69 provides that a "cancellable agreement" can be cancelled by notice. "Cancellable agreement" is itself defined by Section 189 as meaning "a regulated agreement which by virtue of Section 67 may be cancelled by the debtor or hirer". Section 67 provide that an agreement may be cancelled under the provisions of the Act if the antecedent negotiations included oral representations made in the presence of the debtor, but continues:- "Unless (my emphasis) .... (b) the unexecuted agreement is signed by the debtor or hirer at premises at which any of the following is carrying on any business - .... (iii) the negotiator in any antecedent negotiations". There were antecedent negotiations between an employee of the first defenders and the pursuer, and these agreements took place at premises at which the first defender was carrying on business, being the same premises at which the agreement was signed. The agreement was an "unexecuted agreement, for the purposes of Section 67(b), as that term is defined by Section 189." The agreement between the pursuer and the second defender is not one to which S69 applies. It is, I think, well known that Sections 67, 68 and 69, and the other sections in Part V which deal with the effects of cancellation, applied to cancellation within the "cooling off" period without cause. They are not intended to derogate from the rights of a party to a contract to rescind it because of a material breach in the Consumer Credit Agreement itself, or in a linked transaction.

 

92.  I accordingly conclude that the pursuer was entitled to and did validly rescind the contract with the second defender and that he entitled to decree in terms of crave 1(b).

 

Breach of duty

93.  Counsel for the second defenders submitted that these defenders incurred no liability if the representations about the pursuer which they had made were proved to be accurate, and these representations would indeed be accurate if either of the two contracts referred to in crave 1 had not been validly rescinded. As I have held that both contracts were validly rescinded that point that falls, but I do not consider that it is in any event well founded. The representation which the second defenders made was the entry which they caused to be put in the credit reference agency registers. This, in the Expedia register (production 5/2/2) shows an entry updated to 16th January 2000, in the following terms:- "Mr Richard Durkin, 329 Springhill Road, Aberdeen, Aberdeenshire, AB16 7SX. HFC Bank Plc loan. Started 14/01/99. Default £1,499. Defaulted 29/12/99. Status history 8. Details updated 16/01/00." Production 5/2/3 is a report from another credit reference agency Equifax, dated 17th February 2000 showing, at page 3, an entry "HFC Bank Plc fixed term. Mr Richard Durkin, default £1,499, current £1,499. Effective date 14/01/99." The representation is clear, and it is that the pursuer is in default of his obligation to pay £1,499 to HFC Bank Plc and had been since 29th December 1999. The issue is not whether the pursuer had validly rescinded the contract, but whether he was in default of his obligations under the loan. Whether he had validly rescinded the contract or not if he had a right to do so for a material breach he would also have had a right not to make payment, and this was a right which he had clearly asserted to the second defenders In these circumstances an allegation that he was in default would have been a false allegation, whether the contract had been formally rescinded or not. It was not suggested that the pursuer had not asserted the right not to make payment in his telephone conversation with the second defenders. His purpose in 'phoning them was to tell them that he would not pay because he was not obliged to pay.

 

94.  Counsel for the second defenders submitted that in condescendence 5 the pursuer averred and offered to proved that it was the second defenders duty to take reasonable steps to satisfy themselves as to whether the pursuer had validly rejected the laptop and rescinded the contract of sale, and not merely to adopt the first defenders' position without further enquiry when they knew it to be in dispute. He submitted that no evidence had been led on that point and that expert evidence was required as to practice of the industry. I do not accept that. I consider that if a financial organisation such as the second defender operating in the financial industry intends to make an adverse representation in a national credit reference agency as to the credit of an individual arising out of a debtor creditor supply agreement and that individual submits to the financial organisation that the information is false for a specific reason, such as the rescission of the contract by reason of misrepresentation on the part of the organisations own agent who negotiated the agreement, the financial organisation making the assertion is under a duty to take reasonable care to ascertain whether it is correct or not. The assertion being made by the second defender was not a simple assertion that the pursuer had not paid, it was that he was in default, namely that he had not paid what he was obliged to pay. The pursuer had brought to the attention of the second defenders his assertion that he was not obliged to pay because he had terminated his contract with the first defenders.. That put the second defenders under a duty to make enquiries. It may be that the exact nature and extent of these enquiries could be circumscribed by industry practice. But the duty to make enquiries of some kind seems to me to be a general duty not dependent on industry practice. This is what the pursuer says in condescendence 5 on page 10, "in any event it was the second defenders' duty not to make such representation to credit reference agencies without having taken reasonable steps to satisfy themselves of the truth thereof, when they knew it to be in dispute". I consider that that averment accurately reflects the duty of such a person as the second defenders when making representations as to credit of one of their customers. I accordingly reject the second defenders' submission on this point, as I do the submission that in the absence of specific averments as to what the defenders could have done to discharge the alleged duty there was no basis in fact for saying that the duty had been breached. They should have made inquiry. They told the pursuer that they would only accept recission of their contract if thee first defenders accepted the return of the computer. They told him it was up to him to sort matters out with the first defenders. That is what the pursuer said he was told and I believe him. He did not say he was told by the second defenders that they were making inquiries. In the absence of any evidence from any source, including the second defenders themselves, or even any pleadings, that they made any inquiry at all, I infer that they made none.

 

Loss Generally

95.  There are three elements of the pursuer's claim for loss, namely his loss in respect of zero interest credit card usage, the loss of his proposed purchase of a house in Spain with the capital gain that would have given him, and.general injury to his credit,

 

96.  I am satisfied that the second defenders negligently allowed a misrepresentation to the effect that the pursuer was in default under a credit agreement with HFC Bank to be made, and thereafter took no steps to withdraw the representation notwithstanding the pursuer's repeated requests with the result that the entry remained on the credit agency references until approximately 2005/2006. I accept the pursuer's evidence on this point and there was no contradictory evidence relating to it. I also accept from the terms of the two reports, from the letters lodged by certain financial institutions and spoken to by the pursuer, and from the pursuer's evidence himself that a number of people made enquiry of the registers and became aware that there was a negative credit reference, or a reference which had the effect of cautioning prospective lenders, posted against the pursuer.

 

97.  I am satisfied from the evidence of the pursuer, Mr Clark, and Mr Young that the effect of the existence of these entries in the registers was that the pursuer was refused credit which he would otherwise, on a balance of probability, have been given. He suffered loss to his general credit reputation, and by virtue of being deprived of the facility which he had previously enjoyed, and which he had previously used to very good effect, to "play the game" with revolving 0% credit cards he required to pay a significant amount of interest more than he would otherwise have done. I am satisfied from the evidence of the pursuer that the lack of availability to him of 0% credit cards caused him to borrow money on the security of his house from Northern Rock which money he would otherwise have borrowed through credit cards, transferring on a regular basis to 0% facilities. The effect of this was to reduce, by 2003, the amount of free equity in his house in Aberdeen for borrowing purposes. I accept that notwithstanding the adverse credit ratings he was still able to borrow money from his existing bank, the Clydesdale, on interest bearing terms because he was an existing customer, and from Northern Rock, secured on his house, again because he was an existing customer. The pursuer was`able to continue to operate his existing credit cards, mortgage and bank accounts, but he could not open any new accounts

 

Zero per cent interest

98.  So far as credit card losses are concerned, counsel for the pursuer submitted that he had proved these to a figure of £9,926 but I agree with counsel for the second defenders that this figure represents the gross loss, not the actual loss. It was clear from counsel for the second defenders' cross-examination of the pursuer, and from his cross-examination of the pursuer's expert, Mr Clark on the technical issues as to how the "revolving zero credit" facility worked that not all of the interest paid by the pursuer was paid in circumstances which, but for the second defenders' misrepresentation, would not have been charged by virtue of the pursuer's continual use of zero credit facilities. The zero credit rate only applied to transferred balances. It did not apply to purchases made on the new account. Accordingly, if the pursuer ran up a credit card debt of £10,000 and transferred it to one of the apparently very many companies willing to accept the transfer but charge no interest on the sum transferred, and if the pursuer then in the course of the nine months or one year following the transfer was to use his credit card to make purchases he would be charged interest (perhaps fifteen per cent per annum) on these purchases. At some time, and in the pursuer's case I accept it would never have been later than when the zero per cent period on transferred balances facility ran out, the balance would be transferred to another company, providing a similar zero rate facility. There would have been no limit to the number of such accounts the pursuer held at any one time but it seems to me he would have had to transfer every account within a month of starting to avoid incurring interest on purchases, and there is no suggestion in the evidence that he did that. In addition, the pursuer would have had to pay two per cent on every transferred balance as a handling charge. That could either be paid or debited to his account, in which event it too became interest free. It accordingly did not necessarily impact on his interest but it is a charge that he had to accept as a price for obtaining the zero balance, and sooner or later that price would have to be repaid. Accordingly, when he ceased to have the benefit of transferring into zero rated accounts, he saved two per cent of the transferred balance each time a transfer would have been made.

 

99.  The amount claimed being the total amount of interest paid on the accounts is therefore overstated to some extent, certainly to the extent of that two per cent on each transfer and also to the extent that interest is included in the pursuer's calculation which is in fact interest charged on new purchases. Examples can be taken from the documentation which has been lodged by the pursuer relating to his credit cards. (This is only partial documentation because the pursuer only lodged such of his records which showed a payment of interest. As that was why he was lodging the records, that does not seem to me to be unreasonable on the part of the pursuer himself, although it would have been better had those advising him lodged the entire records) The Co-operative Bank statement for the 18th December 2002 is a one page statement giving an opening and closing balance and details of all transactions in the course of the month to the 18th December. It shows an opening balance of £9,800, various debits totalling £307.60, a payment by direct debit of £196, and an interest charge of £112.15. If that account had been operating on zero interest there would have been the same opening balance of £9,800 and the same new purchases. There would have been a payment of the minimum amount required, by way of monthly payment, which could well have been the same and there would have been an interest charge that would only have related to new purchases since the zero rate account had been set up. In other words the interest charge would only be applied on the amount by which the opening balance in any given month exceeded the transferred balance when the account was opened.

 

100.          At the end of the chosen period for the account, be it nine months or one year, the final closing balance would be transferred into a newly opened zero rate account and the process would begin again.

 

101.          The loss to the pursuer in respect of the interest schedule which he has prepared should therefore properly be the total amount of the interest which he paid less the two per cent handling charge he would have required to pay every time he opened a new zero interest account and rolled over the "old" balance into it. Assuming he did this once a year the total amount of the interest which he had paid should be reduced by two per cent of the capital to allow for the saving he made by not having to pay the handling charge. Assuming he was paying an average rate of interest of 15 % during the period claimed this would reduce the cost by two fifteenths or 13.33 % meaning that the pursuer's true loss is 86.66 % of the £9,926, namely £8,602. In addition, as indicated above, the claim as put forward includes that element of interest which would be attributable to purchases made in the course of the yearly life of each credit card. The total value of these purchases, and therefore the interest applicable to them, would increase during the year and then be transferred off into a new zero credit account and attract no interest for the coming year. The principle was accepted by the pursuer in evidence and spoken to more clearly by Mr Clark but the detail, and the financial consequences, were not assessed in the evidence. I doubt if, on the productions, a proper arithmetical evaluation of the part of the interest attributable to purchases as opposed to opening balances could be carried out and on one view it could be said that the pursuer has therefore not proved his case in this regard. In all the circumstances I have simply taken a broad brush approach and conclude on the side of safety to the second defenders that over the course of each year twenty per cent of the interest would be attributable to new purchases as opposed to transferred balances. I will accordingly reduce the figure of £8,602 by twenty per cent to the figure of £6,880 for extra interest paid.

 

 

Property in Spain

102.          The pursuer claims that he lost the opportunity to buy a property in Spain because he was unable to fund the necessary mortgage for it because the free equity in his house in Aberdeen, which he would have used as security for that part of the purchase price which he could not fund by borrowings in Spain, had been reduced from what it would otherwise have been in 2003 by virtue of the fact that he had been unable from the year 2000 through to the end of 2003 to maintain his previous lifestyle of zero per cent revolving credit. This had resulted in him borrowing additionally on the security of his property in Aberdeen. But for the additional borrowings he would have had free equity in his Aberdeen property in excess of £60,000. But for the existence of the credit card references he would have continued to fund his lifestyle by means of zero rate credit and would not have needed to borrow further from the Northern Rock against the security of his Aberdeen property. All of this follows from acceptance of the pursuer as a credible and reliable witness so far as his own finances are concerned and also from the witnesses Mr Young and Mr Clark.

 

103.          The consequences of this can be seen from the pursuer's ninth inventory of productions, the letter from the Northern Rock dated 20th February 2007. This shows that as at October 2003, shortly before the proposed purchase of the property in Spain, the pursuer owed the Northern Rock £3,990.26 in respect of his original borrowings. He had, however, taken out two other loans, namely £30,000 in June 2001 and £25,000 in April 2003. In October 2003, the account had an outstanding dedit balance, according to the Northern Rock letter, of £42,824.86. It can clearly be said that but for the second two loans, and on the agreed value of the pursuer's property in 2003 of £65,000, the equity in the pursuer's Aberdeen property would have been £61,010. In fact, because of the two additional borrowings, the free equity was £18,185. This, unsurprisingly, had a dramatic effect on the pursuer's ability to borrow money on the strength of his Aberdeen property through the only person who, because of his adverse credit rating, would be willing to lend to him, namely his existing secured lender. I was told, and accepted, that in late 2003 the Northern Rock would have been prepared to advance 125 per cent of the value of the property, namely £81,250. With only the original loan outstanding (£3,990) the pursuer would have been able to borrow £77,260. This would have left him needing £6,240 which I am satisfied on the evidence he could readily have funded through credit cards or personal loans. He would have been able to buy the property in Spain and on the balance of probabilities he would have bought it.

 

104.          As a consequence of the additional loans, however, the borrowable sum available to the pursuer as a matter of fact in late 2003 was reduced, according to my arithmetic, to £34,436. The basic cost of the Spanish property was €281,274 euros.. The Spanish mortgage would have provided seventy per cent of this namely €196892.. The pursuer would require to provide the remaining thirty per cent (€84382), plus VAT of seven per cent (€19689) and transaction costs of six per cent (€16876). These figures total €120947, in sterling £83,400. Deducting £34,436 which the pursuer could have borrowed from the Northern Rock leaves £48,564 for the pursuer to find from other funds. From the evidence which he gave me I am satisfied that he could not have done so and accordingly that he is correct in saying that he was not financially able to purchase the property UP14 in late 2003/early 2004.

 

105.          Counsel for the second defenders submitted that the thirty per cent deposit figure spoken to by the pursuer and Mr Knott should not be taken as the correct figure. The other expert witness adduced by the pursuer, Mr Clark, in addition to his role as a financial adviser in the UK had himself become involved both personally and for acquaintances and clients in the Spanish property market. He and six friends had purchased fourteen properties in the Marbella area of Spain, being two for each of them. These had been purchased off plan and, acting through a solicitor with premises in Southern Spain and experience in these matters, they had negotiated a deal whereby they paid fifteen per cent. The banks dealt with these seven customers individually. Mr Clark also said that while he was aware of the thirty per cent rule he was not aware of any person who had bought property in Spain paying more than twenty per cent.

 

106.          Counsel for the second defender sought to cross examine Mr Clark on the availability of fifteen per cent deposits for non resident mortgages in Spain. Counsel for the pursuer objected to the line of evidence on the basis that there was no record for it, and I allowed the evidence to proceed under reservation. Having considered the matter I have decided to repel the objection. The pursuer averred on record, condescendence 6 page 11, that the purchase of the Spanish property "would have been affected by means of payment of a thirty per cent deposit and with the balance being provided by means of a secured loan on that property". This averment is met in answer 6 by an averment that the injury and damage founded upon by the pursuer was too remote a consequence of the alleged negligence, and that the pursuer had been under a duty to mitigate his loss in a particular way which he had failed to do. There are no averments relating to a property in Spain being capable of being purchased by means of a lower deposit. Had the pursuer made it clear in his pleadings that 70% was said to be the maximum a non resident could borrow from a Spanish bank I might have had more sympathy with the objection. The pursuer's averments, however, simply state what the pursuer would have done, not that this was the best he could have done. The reference to the availability of fifteen per cent mortgages to non residents in Spain came from the pursuer's own expert witness, Mr Clark. In his evidence in chief, Mr Clark had been asked to explain how the seventy per cent Spanish mortgage for non residents applied and he said "Invariably unless they use one of the large UK banks, perhaps Barclays, most will buy directly using Spanish banks and if they come up with up to thirty per cent deposit the bank will find the other seventy per cent for the purchase of that property" subject to valuation. His examination in chief on this topic proceeded on the basis of the Spanish bank lending seventy per cent. Towards the start of his cross-examination, counsel for the second defender turned to the issue of the deposit by saying to the witness "You have told Mr Beynon that unless you use one of the large UK banks, the Spanish banks would provide seventy per cent mortgages you have to provide the thirty per cent deposit". That was effectively a restatement of what I had certainly understood to be the tenor of Mr Clark's examination in chief. Mr Clark answered:- "Didn't have to. I mean in my experience that's not the norm. Myself and a number of clients purchased fourteen properties in Spain in a similar location and we only put down fifteen per cent on those deposits for those houses". The witness introduced the topic, it contradicted the evidence he had given, he had not volunteered that evidence in the course of his examination in chief and it seems to me counsel for the second defender was fully entitled to explore it. Accordingly, I repel the objection.

 

107.          However I prefer the evidence of Mr Knott and the pursuer in respect of the thirty per cent deposit to that of Mr Clark. First, Mr Clark explained that the purchases that he and his friends and colleagues had made had been purchases "off plan". Such purchases, as the name suggests, are of properties that have yet to be built. Mr Clark confirmed that in such cases the unbuilt properties sold at a discount to properties which had been completed such as Unit 14. Second, it was clear that Mr Clark and his colleagues were purchasing one property as individuals and one property for investment purposes which could be seen as a business investment. Third, although the banks had dealt with the individuals, two purchases for each, the evidence was, that the two sellers of each development, had each been provided with an opportunity to sell seven properties off plan, and each of the two banks with an opportunity to fund the package. Fourth, Mr Clark said, by reference to his own experience, that fifteen per cent would be enough for a client to "secure a property" but that the client "may well have been required to pay thirty per cent" though no more. Fifth, Mr Clark explained that the rules of conflict of interest on the part of solicitors were rather different in Spain than they are in Scotland. It would appear that NCS, the solicitors instructed by Mr Clark for his deal with his six colleagues, acted also for the developers so that, as Mr Clark put it, "He's got a client who is a developer putting up these houses. We go to see them. We go to the location and say we'd like to buy some of these houses thank you very much, and he, you know, puts it together". Finally, Mr Clark explained that it was, in his words "a no-brainer" for the bank to provide a mortgage on a discounted property. If an individual property was worth 300,000 euros, but discounted to 275,000 as part of a group deal, and the bank lent a percentage of the 275,000, it was still getting a security over a property that was worth 300,000 euros.

 

108.          I felt that Mr Clark's evidence in this point whilst undoubtedly truthful, related to a very special and personal deal and could not be seen as setting out the specific rules which would apply for an individual buying a single existing property such as the pursuer.

 

109.          Mr Knott, on the other hand, spoke purely as a professional. He is and was engaged in advising high net worth clients who are looking to invest in properties in Spain, either as an investment or as a second home. He had been involved in valuations, inspections and surveys of properties since 2002. He explained that generally on a non resident mortgage the purchaser will not get more than seventy per cent from a Spanish lender.

 

110.          That is what Messrs Greens said to the pursuer and it is what the pursuer said he was told and understood to be the case at the time. I prefer and accept that evidence as being more accurate as to the normal practice in Spain in 2003/2004.

 

The Pursuer's actual property loss

111.          I proceed on the basis that the pursuer, had he been able to do so, would have purchased property UP14, at a basic price of € 281274 in December 2003, and that he would have done so had the usual financial arrangements been available to him. By the usual financial arrangements I mean the ones spoken to variously by Mr Knott, Mr Clark and Mr Young, namely a seventy per cent Spanish mortgage with the balance being funded on borrowings based on 125 per cent of the value of the pursuer's Aberdeen home less outstanding borrowings, all on the basis that the pursuer had from 1999 to 2003 been enjoying the benefits of rollover interest free credit cards, with no need to take out the second and third secured loans.. Further, as I have indicated, I accept on the balance of probabilities, that not only could he have done it but that he would have done it and would have set up a new home with his then wife to be, now his wife in UP 14. I also consider that he did not do so because he could not borrow enough money and the reason that he could not was the unavailability of sufficient residual equity in his house in Aberdeen, this equity having been diluted by his requirement to borrow two additional sums of money from the Northern Rock against the security of the Aberdeen property. In December 2006 the property was worth €544600, based on Mr Knott's evidence as to what it actually sold for at that time and his more theoretical valuation bringing out a similar figure.

 

112.          I consider that this knock-on-effect on credit was a direct cause of the pursuer's inability to borrow sufficient on the Aberdeen property and therefore a direct cause of his inability to purchase the Spanish property. I consider that the "but for" test is made out as a matter of fact. It is clear from the second defenders' letter to the pursuer, No. 5/4/2 of process that the second defenders foresaw that putting entries on the credit registers run by Experian and Equifax could have far reaching consequences on the ability of a person to obtain credit. I was provided with evidence from Mr Young as to how these credit references were taken up by lending institutions and that the effect of the entry could be an almost automatic rejection of credit by the lender. It is inconceivable that these consequences would not be known to a commercial bank such as the second defenders. The purpose of their letter to the pursuer, even if generated by altruistic motives, was to bring these potential consequences to the attention of the pursuer in the hope that this would bring about payment and save the pursuer the consequences. Less altruistically it is a simple and legitimate threat. Either way it is indicative of an understanding by the second defenders of the consequences of an adverse entry in the credit registers. One would, of course, have expected just such an understanding. The exact detailed nature of the problem which the pursuer experienced in borrowing money in 2003 was perhaps different from that foreseen in the second defenders' letter but the consequences for him were the same as that foreseen in the letter, namely he was unable to borrow as much money in the UK in 2003 as he would have been but for the entry in the register. This meant that he was unable to purchase the property in Spain which he wanted. It would certainly have been in the contemplation of the second defenders as a matter of commonsense that the mortgage which they referred to in their letter would have been used to buy a property somewhere. The fact that it was in Spain does not, in my opinion, matter. There was no suggestion that the evidence of the rate of rise in prices of the property in Spain was exceptional let alone wrong.

 

113.          The pursuer is not however entitled to the lost gross profit from the second defenders. According to his own evidence the pursuer would have borrowed the full 113% of the price of Unit 14, 70% at Spanish rates and the remaining 43% predominately at UK building society secured loan rates and to a small degree at unsecured or credit card rates. Mr Clark's evidence confirmed that this was achievable. The cost of that funding has to be taken into account and the arithmetic can be found in paragraph 35. I have also taken a broad approach to the issue of selling fees and outlays and proceeded on the basis that they would be the same as the fees etc for buying.

 

General loss to credit

114.          Counsel for the pursuer submitted that in addition to the actual losses which he had sustained the pursuer had suffered a general loss to credit along the lines recognised in King v British Linen & Co (1899) 1F 928 and Wilson v United Counties Bank Limited. [1920] AC 102. He submitted that this general loss to credit sounded in damages over and above any actual damages which the pursuer may, as he had done here, sustained. Counsel for the second defender submitted that any award for damages to credit was circumscribed or limited by the actual damages sustained.

 

115.          The case of King v British Linen & Co dealt with the situation where there had been no specific damage. The only loss which the pursuer had occurred sustained was the loss to his credit standing. That was valued by the sheriff at £100 in 1897, a figure which was not interfered with in the Inner House. It is clear that the reason that the Inner House did not consider it appropriate to interfere with it was because they were dealing with a case where, in the words of Lord Kinnear, "No exact measure" of damages could be fixed. The case is clear authority to the effect that award of damages can be made for simple injury to credit although no actual loss is sustained. It is not, in my opinion, authority for the proposition where injury to credit causes actual loss or damage the fact of the injury itself warrants an award over and above the actual losses.

 

116.          Wilson v United Counties Bank Limited was a case brought by an individual (Wilson) and his trustee in bankruptcy against Wilson's bank. The defenders' negligent handling of the plaintiff's estate whilst he was away on military service caused an actual loss to the estate, and also resulted in the pursuer, Wilson being made bankrupt. The trustee in bankruptcy was held entitled to recover actual losses caused by the negligent management. There was only one claim in respect of damage to credit, namely the fact that Wilson was made bankrupt when, had the defenders managed his affairs prudently, he would not have been. There was no claim that Wilson had suffered any specific loss to his credit by virtue of the bankruptcy, but the fact of bankruptcy was recognised as a serious injury to his general credit standing. This resulted in an award in 1919 of £7,500. The case, as was also the case with King v British Linen, was based on breach of contract and not negligence. The Lord Chancellor, Lord Birkenhead, said of the type of case where a banker, though his customer's account is in funds, nevertheless dishonours the customer's cheque, that the refusal to meet the cheque is so obviously injurious to the credit of a trader that the latter can recover without allegation of special damage reasonable compensation for the injury done to his credit. He applied that principle to the circumstances of Wilson's case where a defendant had expressly contracted to sustain the financial credit of a trading customer and breached that obligation. At page 120, Viscount Findlay said that the fact of bankruptcy must injure the credit of the person made bankrupt, apart from damage to the estate. He continued "In an action for negligence against a solicitor leading to the bankruptcy of his client even if due to fortuitous circumstances the estate had not been damaged, it seems on principle that the jury might give substantial damages for injury to the credit of the person made bankrupt." Later on he said "It was urged that proof must be given of special damage in order to sustain the verdict on this head for more than nominal damages. I cannot see on what principal this contention rests. The mere fact of bankruptcy imports damage to the credit of the bankrupt. It is a natural consequence, and it is for the jury to assess the damages for such a slur."

 

117.          Had there been no finding of specific loss in this case, I would have had no hesitation in finding that an award of damages for the mere injury to credit was appropriate. In modern society credit plays a very big part in the conduct of the daily lives of a significant portion of the population. The financial services industry is constantly advertising loans, credit cards, store cards, mortgages, consolidation accounts etc. To have one's credit worthiness impugned so that one is at risk of being unable to obtain credit on the grounds that he is not credit worthy is, if anything, a more significant matter for the individual than it would have been at the time of King, over a hundred years ago. Mr Beynon has submitted that a figure of £10,000 would be appropriate. The figure of £100 awarded by the sheriff and left standing by the Inner House in King v British Linen translates, according to the Office of National Statistics Publication "Focus on consumer price indices" 2008, table 5/3, to £9,975 in the year 2008. The figure of £5,500 awarded to an individual in Kpohraror v Woolwich Building Society 1996 4All ER 119 was not interfered with by the Court of Appeal in 1996 and, in today's figures, would be worth £8,215.

 

118.          Kpohraror confirmed that such damages were available to individuals who were not traders. In that case a cheque was dishonoured and then the matter put right within 24 hours. Also in that case the plaintiff claimed both special damages and the general damages of £5,500. Lord Justice Evans said at page 124 "The credit rating of individuals is as important for their personal transactions, including mortgages and hire purchase as well as banking facilities, as it is for those who are engaged in trade, and it is notorious that central registers are now kept. I would have no hesitation in holding that what is in effect a presumption of some damage arises in every case in so far as this is a presumption of fact."

 

119.          Evans LJ went on to consider the issue of special damages separately. There is, however, nothing in the judgment of Evans LJ to indicate that had the special damages claim been made out he would not have made an award in terms of the general damage claim. Lord Justice Waite and Sir John May each agreed in all respects with the judgment of Lord Justice Evans

 

120.          The cases of Kpohraror, King and Wilson were all based on contract but it does not seem to me that there is any difference in principle between the nature of damages to be awarded in respect of a loss of credit brought about by a breach of contract, and one brought about by negligent misrepresentation.

 

121.          In these circumstances and standing such a recent decision where the claims appear to have been treated as being capable of existing together, I find that the pursuer is entitled to an award for the general damage to his credit in addition to an award in respect of the actual loss flowed sustained. Having regard to all the circumstances I consider that an appropriate award would be £8,000.

 

Mitigation of loss.

122.          The only case on record for the second defenders on the question of mitigation of loss is that the pursuer did not call upon the defenders to correct the entries that related to the pursuer's account with them. I am satisfied that he did this on many occasions. In his words he "pleaded` with them". The pursuer was cross examined about his failure to utilise the somewhat tortuous statutory notification procedures which were said to be open to him to have the registers changed. There was no evidence led to indicate how these matters were dealt with in practice, how long they took to reach a final conclusion or the likelihood of the pursuer being successful in utilising them. Given the total absence of record for the point and the lack of any evidence concerning it I disregard it. I am in any event quite satisfied that the pursuer believed he had done all he could do to get the registers corrected.

 

123.          I was asked to continue the case for a hearing in respect of interest, expenses, witnesses etc and will deal with these and any other outstanding matters at the hearing fixed in the interlocutor.