Neutral Citation Number: [2005] EWCA Civ 473
Case No: B2/2004/2386
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
HHJ Michael Dean QC
WI 303274
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 28/04/2005
Before:

LORD JUSTICE MAY
LORD JUSTICE RIX 
and
LORD JUSTICE JONATHAN PARKER
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Between:

	COUTTS & CO
(an unlimited company) 	Respondent/Claimant 	
	- and -		
	GABRIEL OSCAR ALAN SEBESTYEN	Appellant/
Defendant	

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Mr Gabriel Sebestyen the Appellant acting In Person
Mr Philip Rainey (instructed by Farrer & Co) for the Respondent
Hearing date: 14th April 2005
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Judgment
Lord Justice Jonathan Parker: 
INTRODUCTION

1.	This is an appeal by Mr Alan Sebestyen (who appears in person) from an order made by HHJ Dean QC, in the Central London County Court, on 28 October 2004.  By his order, the judge entered judgment for Coutts & Co (“Coutts”), the claimant in the action, for £20,073.92 in respect of the overdraft on the appellant’s current account with Coutts, with interest to the date of judgment.   The judge also ordered the appellant to pay Coutts’ costs of the action.    
2.	There was no dispute as to the amount of the overdraft or as to the calculation of interest.   However, by his Defence the appellant denied that he was liable to repay the overdraft.    He took various points on Coutts’ Conditions of Business, as applicable to his current account, and on the application to his dealings with Coutts of the Consumer Credit Act 1974 (“the Act”) and an associated Determination by the Office of Fair Trading promulgated on 21 December 1989 (“the Determination”). 
3.	In his judgment, the judge rejected the appellant’s contentions both in relation to the Conditions of Business and (save on one point, to which I shall return) in relation to the Act and the Determination.
4.	The appellant applied to the Court of Appeal for permission to appeal.    On 20 January 2005 Jacob LJ granted permission to appeal limited to issues as to the effect of the Act and the Determination, and directed that the Office of Fair Trading (“the OFT”) be given an opportunity to comment on those issues and (if necessary) to appear at the hearing of the appeal.   In the event, the OFT has not appeared before us, but by letter to the Civil Appeals Office dated 22 March 2005 it has made a number of detailed comments, for which we are grateful.
5.	 By a Respondent’s Notice Coutts puts in issue the one point on which the appellant succeeded before the judge.
6.	At the conclusion of the hearing we indicated that the appeal would be dismissed, but that we would give our reasons in writing in due course.
THE FACTS
7.	In August 1977 the appellant opened a current account with Coutts.   At some stage, he was issued by Coutts with a credit card.    At all material times the appellant used the account exclusively for the purpose of paying sums due under direct debit arrangements and standing orders.   Prior to April 2002 there was no agreement for any overdraft facility on the account and for most of that time the account was maintained in credit.   Payments into the account were made by the appellant from time to time from accounts held by him with a bank or banks other than Coutts.
8.	By letter dated 5 April 2002 Coutts offered the appellant an overdraft facility of £2000 on his current account.   The letter included the following:
“There will be no fee for this arrangement and the current interest rate will be 4% above Coutts base rate, which equates to 8% pa.   This compares favourably to the interest rate charged where no formal overdraft limit exists.   You do not need to take any action, unless you do not want to have the facility, although there is no cost to you should you not use the facility.”
9.	There were two footnotes to the letter.   The first (which related to the figure of £2000) was in the following terms:
“This or any overdraft facility will be subject to review and will be repayable on demand.   We may at any time withdraw the facility and make demand for all sums outstanding.   You may terminate the facility at any time by telling us and repaying all sums outstanding.”
10.	The second footnote (which related to the reference to an interest rate of 4% above base rate) was in the following terms (so far as material):
“We may at any time vary our Base Rate at our discretion by notice in the national press.   The change will also be displayed in our UK offices and on our website ….”
11.	The appellant accepted Coutts’ offer.   From the end of May 2002 onwards the account was at all times overdrawn.   On 24 June 2002 the overdrawn balance passed the agreed £2000 limit for the first time, and at all times thereafter it remained in excess of that limit.   Coutts nevertheless continued to make payments out the account to meet direct debits and standing orders, notwithstanding that the appellant made no further payments into the account.   
12.	By letter dated 26 June 2002 Coutts (by Ms Nadine Alsina, the appellant’s ‘Private Banker’) informed the appellant that the current overdrawn balance on the account was £7,497.67, and that it was incurring interest at the rate of 26%.   The letter went on to request that the appellant rectify the position immediately.    The letter mistakenly said that no formal overdraft arrangements were in place, thereby overlooking the agreed £2000 overdraft limit.   However, nothing turns on this. 
13.	By letter dated 28 June 2002 Coutts informed the appellant that the overdrawn balance had risen to £10,656.32, and that no further debits would be allowed on the account or on the credit card.   The letter continued:
“Any further items that are presented for payment on your account will be returned or [withheld], until there are sufficient funds available on the account to allow for payment.   A charge of [£35] per item will be incurred as per our standard tariff.

Additionally, you should be aware that interest is being charged at 26% on the overdraft which is our standard rate for unauthorised overdrafts.”
14.	Notwithstanding the terms of those two letters, however, Coutts continued to make payments out of the account to meet direct debits and standing orders.
15.	On 1 July 2002 the appellant wrote to Coutts saying that he had not intended to exceed the agreed £2000 limit and that he would be rectifying the position.   However on 24 July 2002 Coutts wrote again to the appellant informing him that the overdrawn balance had now risen to £14,237, and noting with disappointment that no payments had been made into the account.   The letter concluded by threatening further action if the account was not returned to credit within the next 10 days.
16.	On 6 January 2003, no steps having been taken by the appellant in the meantime to comply with Coutts’ requests, Coutts wrote to the appellant demanding immediate repayment of the debit balance on the account, which had by then risen to some £16,745, plus interest.   The total sum demanded was £18,107.49.   No repayment was made, however, and in due course Coutts brought the present action claiming repayment.
THE ACT 
17.	It is common ground:
(a) that the agreement for an overdraft of £2,000 in the terms of Coutts’ letter dated 5 April 2002 was a regulated debtor-creditor agreement within the meaning of sections 8 and 13(c) of the Act, providing for ‘running-account credit’ within the meaning of section 10(1)(a) of the Act (in effect, a revolving credit within the agreed credit limit of £2,000); and   

(b) that, as such, it was subject to the requirements of Part V of the Act (including the requirements as to documentation set out in sections 57 to 63 of the Act) save and in so far as it was excluded or exempted from such requirements.
18.	Section 65 in Part V of the Act provides that an “improperly executed” regulated agreement is unenforceable by the creditor without a court order.   It is common ground that a regulated agreement is “improperly executed” for this purpose if the requirements of sections 57 to 63 have not been complied with.    
19.	Section 74 of the Act provides for the exclusion of certain agreements from Part V.   It provides as follows (so far as material):
“74. – (1)  This part …. does not apply to – 

(a) ….

(b) a debtor-creditor agreement enabling the debtor to overdraw on a current account, …

(c) ….

(2) ….

(3) Subsection 1(b) … applies only where the OFT so determines, and such a determination – 

(a) may be made subject to such conditions as the OFT thinks fit …

(b) ….

(3A) …. in relation to a debtor-creditor agreement under which the creditor is …. a bank …. the OFT shall make a determination that subsection 1(b) above applies unless it considers that it would be against the public interest to do so.

(4) ….”
20.	Part VI of the Act relates to matters arising during the currency of credit agreements.   Section 82 in Part VI, which is headed ‘Variation of Agreements’, provides as follows (so far as material):
“82. – (1) ….

(2) Where an agreement (a “modifying agreement”) varies or supplements an earlier agreement, the modifying agreement shall for the purposes of this Act be treated as – 

(a) revoking the earlier agreement, and

(b) containing provisions reproducing the combined effect of the two agreements,

and obligations outstanding in relation to the earlier agreement shall accordingly be treated as outstanding instead in relation to the modifying agreement.

(3) ….

(4) If the earlier agreement is a regulated agreement for running-account credit, and by the modifying agreement the creditor allows the credit limit to be exceeded but intends the excess to be merely temporary, Part V …. shall not apply to the modifying agreement.

(5) ….

(6) ….

(7) ….”

THE DETERMINATION
21.	The Determination (which is signed by the Director of Fair Trading) is made under section 74(3) of the Act.  I set it out in full:
“1.	Under the powers conferred upon me by Sections 74(3) and (3A) and 133 of the Consumer Credit 1974, I, the Director General, being satisfied that it would not be against the public interest to do so, hereby revoke with effect from 1st February 1990 the Determination made by me in respect of Section 74(1)(b) and dated 3 November 1983 and now determine that with effect from 1st February 1990 Section 74(1)(b) shall apply to every debtor-creditor agreement enabling the debtor to overdraw on a current account, under which the creditor is a bank.

2.	This Determination is made subject to the following conditions:-

(a)	that the creditor shall have informed my Office in writing of his general intention to enter into agreements to which the Determination will apply;

(b)	that where there is an agreement between a creditor and a debtor for the granting of credit in the form of an advance on a current account, the debtor shall be informed at the time or before the agreement is concluded:

	- of the credit limit, if any,

	- of the annual rate of interest and the charges applicable from the   time the agreement is concluded and the conditions under which these may be amended,

-	of the procedure for terminating the agreement;

	and this information shall be confirmed in writing.

(c)	that where a debtor overdraws his current account with the tacit agreement of the creditor and that account remains overdrawn for more than 3 months, the creditor must inform the debtor in writing not later than 7 days after the end of that 3 month period of the annual rate of interest and charges applicable.

3.	In this Determination the terms ‘creditor’ and ‘debtor’ shall have the meanings assigned to them respectively by Section 189 of [the Act].  The term ‘bank’ includes the Bank of England and banks within the meaning of the Bankers’ Books Evidence Act 1879 as amended.”
22.	It is common ground that condition (a) in the Determination was satisfied in the instant case by a letter from Coutts to the OFT dated 3 January 1990.   Condition (a) accordingly falls out of the picture for present purposes.
THE HEARING BELOW
23.	It was common ground before the judge (as it is before us) that when Coutts made a payment out of the account which took the overdrawn balance over the agreed £2,000 limit, or when it made a payment out of the account where that limit had already been exceeded, it thereby impliedly agreed  to grant additional credit pro tanto, in excess of the credit limit on the account: in other words, that each such payment constituted or evidenced a “modifying agreement” within the meaning of subsections (2) and (4) of section 82 (see paragraph 20 above).   I will refer to such payments hereafter as unauthorised payments.
24.	For Coutts, Mr Philip Rainey of counsel (who also appears for Coutts before us) submitted that such “modifying agreements” were exempted from Part V of the Act by section 82(4); and in consequence that conditions (b) and (c) in the Determination no longer applied.   He further submitted that in any event, even if (contrary to his primary submission) conditions (b) and (c) continued to apply, condition (b) had been met by Coutts’ letter dated 5 April 2002 and condition (c) had been met by its letters dated 26 and 28 June 2002.   
25.	The appellant submitted that on its true construction section 82(4) did not have the effect of disapplying the conditions in the Determination; that they continued to apply; and that in the event they had not been satisfied.   He sought to rely on section 82(2) as providing support for that submission.
THE JUDGE’S JUDGMENT
26.	The judge addressed the issues arising in relation to the Act and the Determination in paragraphs 18 to 31 of his judgment.   
27.	After referring to the general scheme of the Act, to the terms of the Determination, and to the fact that condition (a) in the Determination had been satisfied by Coutts’ letter dated 3 January 1990, the judge turned (in paragraphs 21 to 27 of his judgment) to subsections (2) and (4) of section 82.   
28.	In paragraphs 22 to 26 of his judgment he addressed Mr Rainey’s submissions, as follows:
“22.	Mr. Rainey submitted that when the bank accepted the customer’s offer to exceed the overdraft limit by advancing the sums requested under the standing orders or direct debits the parties were agreeing to modify the original agreement by extending the agreed credit limit.  This was a modifying agreement within s. 82(2) but was exempted from Part V by s. 82(4) as the bank clearly intended to grant only a temporary excess of the original credit limit as evidenced by its repeated demands that the account should be put in credit.  In these circumstances the bank was not obliged to comply with condition (c) of the Determination in order to claim exemption from Part V because this exemption was provided by s.82(4).

23.	Mr. Rainey submitted that condition (c) only applied where s. 82(4) was not applicable i.e. where there was no “…earlier agreement… [being]…a regulated agreement for running-account credit…”  In this case there was such an earlier agreement as evidenced by the letter of 5th April.  This was a regulated agreement which satisfied condition (b) of the Determination and the ad hoc agreements made as each request for credit in excess of the agreed limit was accepted modified the earlier agreement.  There was no need to satisfy Part V in this case because s. 82 (4) said so.

24.	Condition (c) was only applicable where s. 82(4) did not apply, i.e. where the bank had not agreed any prior overdraft facility at all but decided to honour a request for payment from its customer even though this would cause the account to be overdrawn.  In such a case the bank would have to give the notification under condition (c) if the account remained in deficit for three months.

25.	Mr. Rainey’s argument has an attractive logical coherence.  I accept that the wording of s. 82(4) does apply on the facts of this case.  However, this does not necessarily have the consequence that condition (c) does not equally apply in the case of a bank.  The difficulty from Mr. Rainey’s point of view is that condition (c) itself does not recognise Mr. Rainey’s critical distinction between a situation where there has been an earlier agreement for credit and the agreed limit has been exceeded and the case where, without any existing credit agreement, the bank simply honours a request for payment which creates an overdraft at that moment.  Condition (c) in terms applies, without any reference to any prior agreement, “…where a debtor overdraws his current account with the tacit agreement of the creditor…”  On Mr. Rainey’s own analysis there is such a tacit, i.e. an implied, agreement to either extend or to grant an overdraft whenever a bank honours a request for payment which it in not obliged to do, whether the context is one of exceeding an agreed limit or giving ad hoc credit without any pre-existing overdraft facility whatsoever.

26.	I can find nothing in the wording of the Determination to suggest that it is not to apply even where on the facts s.82(4) is also applicable.  Condition (c) is not inconsistent with s. 82(4), rather, it complements it.  S. 82(4) itself only operates where the bank intends to permit a temporary excess of the agreed credit limit.  This period is not defined in s. 82 (4).  Condition (c) effectively qualifies that temporary period at three months in the case of banks.  The object of this legislation is manifestly protection of debtors, including, within that protection, provisions intended to ensure that they are made aware of the financial consequences of obtaining credit.  Condition (c) is wholly consistent with this policy in requiring the bank, after a period of grace, to take positive steps to give information as to the financial consequences of permitting any tacit  overdraft to continue.  In my judgment the bank’s obligation arises irrespective of whether there was any prior agreement for an overdraft facility.  In this case the bank sought to comply with condition (c).  In my judgment, not only were they acting with commercial prudence in so doing, but they were taking a necessary legal step in order to enable them to enjoy the continuing advantage of the protection afforded to them by the Determination.”
29.	The judge accordingly concluded (in paragraph 27 of his judgment) that the appellant was correct in his submission that Coutts was required to satisfy condition (c), and that section 82(4) did not have the effect of disapplying that condition.
30.	The judge then turned (in paragraphs 28 to 31 of his judgment) to the effect of the Determination, saying this:
“28.	Mr. Sebestyen submitted that the bank had failed to satisfy condition (c) of the Determination in a number of respects.  Firstly, the notification under condition (c) was invalid.  The letters of 26th and 28th June 2002 were premature and should have been sent within a period or “window” of seven days once the overdraft limit had been exceeded for three months.  Further, the letters did not specify the “charges” as required by condition (c).  The original letter of 5th April itself also failed to satisfy condition (b) as it failed to identify the charges.  The evidence of Mr. Jackson was that the bank made no charge as such for providing either an agreed or any unauthorised overdraft.  There was a differential interest rate.  On prior agreed borrowings the rate was 8% p.a. and on unauthorised advances the rate was 26% p.a. at the material times.  This was made clear in condition 12 of the bank’s general conditions.  The letter of 5th April had identified the rate on agreed borrowings as 8%.  The bank did make a quarterly charge of £45 for current accounts which was payable irrespective of whether the account was in credit or debit.  It also levied transaction charges, including an enhanced charge of £35 per item if it rejected any request for payment.  If an unauthorised payment was requested and paid this would only attract the standard transaction charge whether or not the account was in credit.

29.	I am satisfied that the bank has complied with both conditions (b) and (c) of the Determination.  The word “charges” in these conditions is not defined in the Determination.  However, in the context of the Determination, dealing with the provision of credit, the natural construction must be that the charges of which notice must be given should relate to charges made  in connection with the provision of credit and not the ordinary charges made by the bank in consideration of maintaining and operating a current account.  The £35 charge made on rejection of a request for payment is a charge for denying credit rather than for providing credit.  Mr. Rainey supported this approach by reference to The Consumer Credit (Total Charge for Credit) Regulations 1980 made under the Act.  Reg. 5 (1) (f) and (h) exclude charges for payments made from and to a current account as a constituent in the total charge for credit.  In my judgment neither condition (b) nor (c) requires the bank to notify the debtor of charges which may be levied for providing a current account nor for transaction charges which are not incurred in consideration of the provision of credit.

30.	I [am] not persuaded that condition (c) limits the bank’s opportunity to give the notification required by this condition to a “window” of seven days following the existence of an overdraft for three months.  This is not the natural construction of an obligation to give a notification “…not later than 7 days after the end of that 3 month period…”  This suggests a final deadline for the giving of the notice.  The purpose of the notice is to protect the debtor by informing him of his actual and potential liability if the tacitly agreed overdraft is allowed to continue.  The sooner he is put on notice the better from his point of view.  The reason for not requiring the bank to give earlier notice was explained by Mr. Rainey as being a recognition of the practical reality that sometimes accounts get overdrawn for quite short periods, e.g. when there is a delay in remitting funds to the account.  Condition (c) is intended to allow a period of tolerance otherwise the bank might find itself serving numerous notices for quite short periods of overdraft.  If a bank chooses to act cautiously by notifying the debtor before it is legally obliged to do so, it is entitled to so do in my judgment.  The debtor is certainly not prejudiced by this early notice.

31.	In the light of my findings above I am satisfied that the bank complied with condition (b) by its letter of 5th April and also with condition (c) by its letters of 26th and 28th June 2002.  The June letters were not invalid as being premature.  In both of them the bank notified Mr. Sebestyen of the applicable rate of interest.  There were no other charges applicable to the provision of credit.  The charge of £35 for rejection of requests for further extensions of the overdraft was in fact notified by the banks’ letter of 28th June but this was not a requirement of condition (c) because this was not a charge for providing credit.”
31.	The judge accordingly allowed Coutts’ claim.
THE APPELLANT’S GROUNDS OF APPEAL
32.	By ground 1 of his grounds of appeal the appellant contends that the judge failed to take proper account of section 82(2), and in particular the provision in subparagraph (a) to the effect that on the making of a “modifying agreement” the earlier agreement is revoked.    By ground 2 he contends that the judge was wrong to conclude that section 82(4) had any relevance on the facts of the instant case, in that Part V of the Act had already been excluded by section 74(1)(b) (subject always to conditions (b) and (c) of the Determination).   By ground 3 he contends that the agreements made by Coutts in the instant case were not “tacit” agreements within condition (c) but express agreements within condition (b).   By ground 4 he contends that, if (contrary to his contention in ground 3) condition (c) is in point, on its true construction it requires that the specified information be given within the 7-day period referred to in the condition, and that it is not satisfied if the information is given at some time prior to the commencement of that period.   By ground 5 he contends that the judge was wrong to conclude that condition (b) was satisfied in this case, and in particular (i) that the word “charges” in conditions (b) and (c), on its true construction, embraces all sums, other than interest, payable by the debtor in connection with the overdraft, and (ii) that on the making of a “modifying agreement” the earlier agreement is revoked (see section 82(2)(a)) with the consequence that a new memorandum is required, which must include the terms of the earlier agreement (so far as still subsisting) and the terms of the modifying agreement.
COUTTS’ RESPONDENT’S NOTICE
33.	By its Respondent’s Notice, Coutts supports the judge’s conclusions as to the true construction of conditions (b) and (c) in the Determination and as to Coutts’ compliance with those conditions, but it contends that the judge ought to have concluded that on the true construction of section 82(4) there is no obligation on a bank to comply with condition (c) in the case of unauthorised payments (at least in circumstances where the bank has previously complied with condition (b)); and that, having accepted that Mr Rainey’s argument had “an attractive logical coherence”, the judge ought to have gone on to hold that in relation to the agreement for the £2,000 overdraft Part V was excluded by reason of Coutts’ compliance with condition (b); and that in relation to the unauthorised payments (which represented “modifying agreements” within the meaning of subsections (2) and (4) of section 82) Part V was excluded by subsection (4).
THE OFT’S COMMENTS
34.	By its letter dated 22 March 2005 the OFT makes the following comments on the application of the Act and the Determination to the facts of the instant case:
“1.	We can confirm that it is the OFT’s view that it is not against the public interest that bank current account overdraft facilities continue to be made speedily and informally, without the need to comply with the documentation and other requirements of Part V of the Act, provided that there is transparency for the debtor as to key consequences;

2.	It is our view that the wording of paragraph 2 (c) of the Office’s Determination in respect of section 74 (1) (b) does apply both to a tacitly agreed overdraft and a tacitly agreed extension to an existing overdraft agreement.  We find it difficult to distinguish between the two as matter of principle in relation to this paragraph, particularly since the purpose is to inform the debtor of the relevant interest rate and charges.  This is likely in practice to be of particular significance in the case of an extension to an existing overdraft agreement, where the interest rate applicable may be substantially higher than that which applies to the initial overdraft;

3.	We do not consider that the creditor has a limited window under condition (c) between the end of the 3 month period and seven days thereafter, to inform the debtor of the relevant interest rate and charges.  This does not appear to us to be a sensible interpretation of that provision.  As long as the debtor has been adequately “informed” it seems to us that the information could be provided at any time up to the end of the 7 day period, including before the 7 day period commences;

4.	We consider that the word “charges” in conditions (b) and (c) means charges, whether they are included in The Consumer Credit (Total Charge for Credit) Regulations or not, which relate to the provision of the credit service in question, whether it is the overdraft facility or an extension to an existing overdraft;

5.	Turning to section 82, we do not consider that section 82(2), in the situation where a regulated overdraft agreement is varied by an agreed extension and so the earlier agreement is revoked, causes the obligation in condition 2(b) of the Determination to be triggered (namely to inform the debtor “at the time or before the agreement is concluded” of the credit limit, interest rate and charges and procedure for termination), but only in accordance with its terms, so that any of this information which has been made available before the modifying agreement is concluded need not be repeated;

6.	We do not consider that the effect of section 82(4) can be to disapply the Determination where a tacitly agreed extension to an existing regulated overdraft agreement has run for more than 3 months, since that situation is catered for by condition (c) of the Determination.  Were it otherwise, it appears to OFT that, in the situation where a tacit extension has run for three months, there would be no obligation to inform or have informed a debtor of the higher interest rates and additional charges which can apply when an agreed overdraft is extended by tacit agreement.  Since condition (c) (namely, “that where a debtor overdraws his current account with the tacit agreement of the creditor and that account remains overdrawn for more than three months, the creditor must inform the debtor in writing not later than seven days after the end of that three-month period of the annual rate of interest and charges applicable”) would not come into play for the first three months, however, it seems clear that if during this period, the creditor intends the excess to be merely temporary, then section 82(4) will have the effect that Part V (except section 56) does not apply for that period and there will be no obligation as to the formalities of the agreement.”

THE ARGUMENTS ON THE APPEAL
35.	The arguments addressed to us on this appeal were largely, if not entirely, a rerun of those which were addressed to the judge.   Having heard the appellant’s oral submissions (in which he elaborated on his written skeleton argument), we did not find it necessary to invite Mr Rainey to make oral submissions as to Coutts’ compliance with conditions (b) and (c) in the Determination since we were satisfied that even if the appellant were correct in his contention that such conditions continued to apply, on the facts they had been satisfied.   In those circumstances (and following an indication from the court) Mr Rainey in turn did not consider it necessary to pursue his contentions as to the true construction and effect of section 82(4).
CONCLUSIONS
36.	If, on the facts of this case, conditions (b) and (c) in the Determination (even if they applied to the unauthorised payments) were satisfied, the question whether the conditions applied becomes academic.   
37.	I turn first, therefore, to the question whether conditions (b) and (c) (if applicable) were satisfied in this case.   I do so on the assumption (but without deciding) that the conditions were applicable notwithstanding section 82(4).
The relationship between condition (b) and condition (c)
38.	In my judgment conditions (b) and (c) are, on their true construction, mutually exclusive, in that condition (b) applies only to express agreements between bank and debtor for the granting of credit, whereas condition (c) applies only to “tacit” (that is to say unexpressed or implied) agreements for credit, e.g. where (as in this case) a bank is content to make a payment out of an account notwithstanding that the payment is unauthorised in the sense that it does not fall within any previously agreed credit limit.
39.	I reach this conclusion for three reasons.   In the first place, the references in condition (b) to “an agreement …. for the granting of credit” and to the time when such an agreement is “concluded” seem to me to point strongly in the direction of express agreements between bank and account-holder.   In the second place, condition (b) would be unworkable in practice if applied to unauthorised payments such as those which Coutts made in the instant case.   It would require the bank, on each and every occasion on which it decided to allow an unauthorised payment out of the account, to write to the account-holder giving him the specified information; to do so before making the payment in question; and to confirm the information in writing, if it had not already done so.    Thirdly, the reference in condition (c) to “tacit agreement” makes it clear that condition (c) is concerned exclusively with the making of payments out of the account which are not authorised by any pre-existing  agreement with the bank (i.e. with the making of unauthorised payments, as I have used that expression in this judgment). 
Condition (b)
40.	Turning, then, to condition (b), I conclude that whilst the condition plainly applied to the original agreement for the overdraft of £2,000, it can (under its own terms, and leaving section 82(4) entirely out of account) have had no application to the unauthorised payments made by Coutts, since such payments were (by definition) not the subject of any pre-existing agreement (i.e. express agreement) between Coutts and the appellant.
41.	So far as condition (b) is concerned, therefore, the only question is whether it was satisfied in relation to the original agreement for the overdraft of £2,000.   As to that, I agree with the judge that Coutts’ letter of offer dated 5 April 2002 contained all the information required by condition (b), and that the condition was accordingly satisfied in relation to the original agreement.    In my judgment this conclusion is unaffected by the provisions of section 82(2)(a), on which the appellant sought to rely.  
42.	As to the meaning of the word “charges” in conditions (b) and (c), I agree with the judge (and with the comment made by the OFT in paragraph 4 of its letter, quoted in paragraph 34 above) that on its true construction it means charges relating to the granting of credit pursuant to the agreement in question, and that it does not include charges for which the account-holder may be liable in any event, absent such agreement.   Reading the word “charges” in the context of the expression “the charges applicable from the time the agreement is concluded” seems to me to lead inevitably to that conclusion.   In the circumstances, I can see no warrant for the wider construction of the word “charges” contended for by the appellant.
43.	Coutts’ evidence, which the judge accepted, was that there were no “applicable charges” in the true sense of that expression.   It follows that Coutts’ letter dated 5 April 2002 complied with condition (b).
Condition (c)
44.	In the light of my conclusion as to the limited meaning of the word “charges” in conditions (b) and (c), the only remaining issue on the true construction of condition (c) is the appellant’s submission that condition (c) requires that the specified information be given to the account-holder within the period of 7 days following the expiry of the 3-month period specified in the condition.   I can at least agree with the appellant that this is essentially a matter of first impression.   My first impression was that the submission was wholly unarguable, and further reflection has served merely to confirm that impression.    The appellant is seeking, in effect, to rewrite the condition.   The expression “not later than 7 days after the end of…” means precisely what it says: as the judge concluded in paragraph 30 of his judgment, it imposes a “final deadline”.   Moreover, the appellant’s construction would lead to an absurd result in that the condition would require a bank which had given the debtor all the requisite information prior to the commencement of the 7-day period to repeat the process during that period. 
45.	That leaves only the question whether, as the judge found, condition (c) was satisfied by Coutts’ letters dated 26 and 28 June 2002.   I agree with the judge that plainly it was.   Each of those letters informed the appellant of the annual rate of interest and, as I have already concluded (see paragraph 43) there were no “charges applicable”.
46.	In the light of the above conclusions, it is, for reasons explained earlier, unnecessary for me to address Mr Rainey’s submissions as to the true construction and effect of section 82(4), or to consider the OFT’s comments on those matters.
RESULT
47.	I would dismiss this appeal.
Lord Justice Rix:
48.	I agree.
Lord Justice May:
49.	I also agree with Jonathan Parker LJ’s reasons for dismissing this appeal.