Covered by a Card

Hamish MacBean considers a recent decision as to the extent of the protection afforded under s. 75 Consumer Credit Act when there is an additional party involved in the transaction.

The protection afforded to consumers paying for goods and services is now well known and many consumers are using credit card payments as a form of insurance against the supplier becoming insolvent. What though of the situation where the supplier of goods or services uses another company to process the card payment on their behalf. Does that break the necessary tri-partite chain?

The issue was considered recently by HHJ Vosper QC in the case of Marshall v Retail Installation Solutions. The decision has not been reported but can be found here[1]. The case concerned the installation of solar panels by the First Defendant (RIS) at the Claimants’ home. There were significant problems with the installation, including the ingress of water into the property which caused the bathroom ceiling to collapse. The point which came before HHJ Vosper as a preliminary issue was whether the Claimants could rely upon s. 75, RIS having gone into liquidation.

The factual matrix was as follows.

1. The Claimants entered into a contract with RIS for the supply and fitting of solar panels;
2. The purchase price was £11,999;
3. RIS subcontracted the fitting of the solar panels to a company called Caddy;
4. The Claimants made payments on 3 separate credit cards to a company called Trueshopping at the request of RIS;
5. Trueshopping supplied the solar panels kits to RIS.

One credit card provider settled the case pre-issue and a second shortly before trial. There was therefore one remaining card provider defending the action at trial (Tesco). It was not in issue that RIS was the supplier and that the Claimants were a debtor. The question for the Court was whether this was a credit agreement made by Tesco under pre-existing arrangements with RIS.

The Defendant’s case was that there were arrangements between Tesco and Trueshopping, but that as Trueshopping was not the supplier of services, there could be no pre-existing or contemplated arrangements.

That position was rejected by HHJ Vosper. At paragraph 36 of the judgment, he said:

The term “arrangements” must therefore be more widely understood.  The ratio of the judgment in Truman is that in each case the facts must be scrutinized to see whether the nexus between the supplier and the creditor is too tenuous to be described as an arrangement.  In answering that factual question a court must have regard to the broad loose language of this part of the Act and to the fact that the Act is intended to be a consumer protection measure’

At paragraph 49 of the judgment, he continued:

‘The reality of the present case is that the Claimants agreed to pay £11,999 for the supply and installation of solar panels at their house.  They dealt with the First Defendant unaware of the arrangement between the First Defendant and Trueshopping under which the First Defendant solicited the contract with the Claimants and Trueshopping then supplied the solar panels and received payment by credit card.  The First Defendant then arranged installation by Caddy.  The Claimants became aware of Trueshopping because the First Defendant directed them to make payment to Trueshopping.  Trueshopping issued the invoice for payment to the Claimants.  Trueshopping and the First Defendant were working together under an agreement whose precise terms are unknown and were never made known to the Claimants but which included an arrangement for payment for the whole of the price of the solar panels and installation by credit card to Trueshopping.  Trueshopping had a greater interest in the supply and installation of solar panels to the Claimants than Truman had in the supply of cars to the customers of Topkarz.  I accept Mr MacBean’s submission that the factual differences between this case and Truman strengthen rather than weaken his submission.  If there were arrangements between the creditor and Topkarz in Truman, as Judge Hughes QC concluded, there is no basis upon which I can distinguish that decision on the facts and say that there were no arrangements in the present case between the Second Defendant and the First Defendant.’

He therefore concluded that as the nexus between the supplier and the creditor was not too tenuous to properly be described as an arrangement. The issue was thus determined in the Claimants’’ favour.

The case is not an Appellate decision and will not be appealed as the Defendant credit card supplier has now settled the case. It does however serve to fill something of a gap in the application of s. 75. It closes a potential avenue to Defendants in arguing that s. 75 does not apply. In many ways this is a consumer protection decision. The credit card companies charge interest and other fees on the amounts they allow consumers to borrow. The corollary to that is that they bear liability in the event that the supplier does not meet its obligations.

[1] The author acted for the Claimants