SHERIFFDOM OF GRAMPIAN HIGHLAND AND
SHERIFF J K TIERNEY
in the cause
DSG RETAIL LIMITED and HFC BANK PLC
Alt: McCallum, Solicitor
The sheriff, having resumed consideration of the cause, Finds in Fact:-
1. The pursuer lives in
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
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
7. In the course of the transaction,
which lasted about an hour, Mr Slorance identified a
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 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
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
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.
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
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
28. In the autumn of 2003 the pursuer
decided to purchase a property in
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
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
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
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.
51. The pursuer's position on record is
that on or around the 28th December 1998 he entered the first
defenders' store in
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.
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
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
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
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
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
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
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
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.
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
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
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.
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
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.
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
consequences of this can be seen from the pursuer's ninth inventory of
productions, the letter from the Northern Rock dated
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.
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
Counsel for the second defender sought to
cross examine Mr Clark on the availability of fifteen per cent deposits for non
resident mortgages in
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
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.
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
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
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.
consider that this knock-on-effect on credit was a direct cause of the pursuer's
inability to borrow sufficient on the
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.  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.
Wilson v United Counties Bank Limited was a case brought by an individual
(Wilson) and his trustee in bankruptcy against
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
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.