IN THE COUNTY COURT AT BRENTFORD	Claim No. A19YJ291 
 
Alexandra Road
High Street
Brentford 
 
Thursday, 18th September 2014

 
 
Before:

DISTRICT JUDGE NISA

 
 
Between: 
 
MR. NATHAN EDWARD DENISON
Claimant
 
-v-
 
SANTANDER UK PLC
Defendant
 
___________________
 
The Claimant did not attend 
 
Counsel for the Defendant:	MR. JAMES ROSS 
Instructed by Squire Patton Boggs (UK) LLP, Leeds, LS3 1ES
___________________

 
JUDGMENT APPROVED BY THE COURT

Transcribed from the Official Recording by
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APPROVED JUDGMENT

THE DISTRICT JUDGE:

1.	This hearing is in respect of the defendant’s application dated 20th March 2014 for a strike-out of the claim and for summary judgment.  I have had sight of the trial bundle, which I have read.  Included in that are the particulars of claim, the defence, the defendant’s application of 20th March 2014 and the witness statement in support of the statement of Leanna Geary, Solicitor acting for the defendant.  I have also read the claimant’s response to the application which I will treat as a statement dated 9th September 2014.  I have also had sight of the defendant’s submissions to the Financial Ombudsman Service by way of letter dated 13th July 2012 and also the final decision by the Financial Ombudsman Service; a decision which is dated 27th February 2013 and in favour of the defendant.  Also, I have had sight of the various documents that have been referred to in respect of this account and the skeleton argument, which the defendant has filed.

2.	Having considered the documents that are before me, which not only appear from the defendant, but include the statement of 9th September 2014 from the claimant, I have also been referred to various authorities and I have an authority bundle.  The defendant’s skeleton argument also refers to the various authorities to support their application.

3.	The claimant is not in attendance today.  I have no reason to believe that he was not informed of today’s hearing.  In fact, his statement of 9th September 2014 is in response to today’s application, and responds directly to the defendant’s evidence and application.  Therefore, I have every reason to believe that the claimant is aware of today’s hearing date.  I have not been informed by anybody as to why he has not attended.  There is nothing on the court file to say that he will not be attending.  Therefore, I have proceeded in his absence.

4.	Turning to the defendant’s application.  The skeleton argument sets out, very clearly, the issues between the parties.  The first issue appears in respect of the claimant’s understanding that the defendant was obliged to reduce the interest rate once the Bank of England base rate is reduced.  That is one of the key points to the claimant’s case.  I note that the defendant states that he has power to vary the interest rate, and this is pursuant to clause 12 of the agreement that these parties have entered into back in 2002.  There is no obligation for the defendant to reduce the interest rate if the base rate is reduced.  The reason primarily being that the terms that the parties signed up to clearly do not provide for the interest rate to be linked directly to the Bank of England base rate.  This was not a tracker type of product.  Also, the claimant has not suggested that the defendant has done anything that would suggest or give the claimant an impression that that was what was agreed between the parties.  Therefore, on the face of it, I cannot see how the claimant’s argument that the defendant should have reduced the interest rate once the Bank of England’s base rate was reduced would be successful.

5.	There is a supporting authority, that of Paragon Finance plc v Nash [2001] EWCA Civ 1466, that actually deals with this point in Paragon Finance Plc v Pender [2005] EWCA Civ 760, which states quite clearly that the creditor’s power to vary interest rates was subject to an implied qualification, and it would not do so improperly, capriciously or arbitrarily, but that a commercial lender was free to conduct its business in what it genuinely believed to be its best commercial interest.  The implied qualification is also set out clearly in case law, and there is no reason to believe or any suggestion from the claimant that it is the case where the defendant did not improperly, capriciously or arbitrarily reduce the interest rate.  It would be very difficult for the claimant to prove that it was not a genuine belief held by the defendant that it was doing the best in terms of commercial best in setting the interest rate as it did.

6.	The second issue the claimant is arguing is that section 3(2)(b) of the UCTA 1977 can be invoked in relation to the defendant’s exercise of its power to vary interest rates.  However, again referring back to case law, Paragon Finance plc v Nash [2001] EWCA Civ 1466 quite clearly established on the grounds that there was no relevant contractual performance when a creditor exercises its power to vary interest rates, because this alters the performance required by the debtor rather than the party invoking the clause.  Consequently, in varying the interest rate the contractual performance by the defendant is not relevant.  On that basis it would seem that the claimant’s argument in this regard discloses no reasons for grounds for bringing a claim and he has no prospect of success in light of this binding authority.

7.	The third issue that the claimant raises in his claim is in respect of what is submitted in clause 12 of the agreement, which allows for variations in the interest rate.  That clause is quite clear.  It is in plain language.  There is no ambiguity and the issue that the UTCCR 1999 applies to the disputed terms, the assessment of such is impossible as the court cannot assess interest rates as being too high or too low.  Therefore, that argument fails.

8.	Also, it would appear that there are certain expressed terms which are not able to be considered in any event, and the interest rate is one of those which are expressly stated.  This is on the basis that, where there is a valid reason provided that the supplier (and that is the defendant here) is required to inform the other contracting party or parties thereof at the earliest opportunity, and that the latter are free to dissolve the contract immediately.  In this particular case the defendant gave notice in advance to the claimant of all the increases in the interest rates, and also informed the claimant that he could dissolve the contract and/or move to another, cheaper product if he chose to.  As a result he was aware at all times of that, but continued with the existing agreement and therefore binding himself to pay the increased interest.

9.	The fourth issue that the claimant raises is that of a proper basis for an unfair relationship claim under the CCA 1974.  This court has a broad power to make a determination of unfairness under section 140A of the CCA 1974.  However, I am reminded that power must be exercised in a judicial manner.  In addition, I must ensure that the relevant circumstances are considered by me.   

10.	Having considered the documents before me, it is clear that the defendant’s standard terms and conditions complied with those regulatory standards.  The defendant’s terms complied with the UTCA 1977, also complied with the fairness requirement of schedule 2 of the UTCCR 1999, and at all times the defendant kept the Financial Services Authority informed of the increases in interest rates, who did not raise any concerns in that regard.  Also, having the Financial Ombudsman Specialist Tribunal consider the compliant by the claimant, which was rejected and no finding was made by them to state that the defendant had acted unfairly.  I have read that report as well.   

11.	Moving on to all other relevant matters.  Determining unfairness, I give further consideration to the defendant’s power to vary the interest rate which could only be exercised if one of the valid reasons specified in clause 8 of the contract applied.  That is exactly what happened in this particular case.

12.	Also, the defendant’s power to vary was subject to the implied limitation of that power and it should not be exercised improperly, capaciously, or arbitrarily, but as a commercial lender and I find that that is exactly what the defendant did.  It was free to conduct its business in what it genuinely believed to be in its commercial interest.  There is nothing personal or malicious in the way that the defendant has behaved towards the claimant.

13.	Also, I note that the interest rate increase was for valid commercial reasons which were driven by external factors beyond its control.  The defendant gave the claimant advanced notice of every variation in the interest rate.  Furthermore, the claimant was at all times entitled to and informed that he could terminate the agreement without any charge and/or apply to transfer to a different loan product, which he did not do.

14.	I also note that the loan product was offered by the defendant competitively in the market at any given time.  There is nothing unfair in the defendant having power to exercise to vary interest rates in an open-ended loan agreement which is very similar to a credit card.  Therefore, it would be quite unreasonable for the claimant to argue that it should be provided with an open-ended loan agreement at a rate so low that it does not take into account any commercial factors that may require that rate to increase in the future.

15.	I also note that the claimant has taken some ten years before first complaining to the defendant about the terms of the agreement, and that is also indicative of the way in which he has progressed this matter.  For ten years he has paid the amounts that were due, he has continued to use this loan agreement, obtaining credit for ten years.  This quite clearly shows the increase of the interest rate taking place on several occasions during that period without any complaint being made until 2012.

16.	Therefore, for the reasons I have already gone through, I believe that the particulars of claim disclose no reasonable grounds for bringing a claim.  The claim has no real prospect of success and I cannot see any reason why this matter should be disposed at a trial.  Therefore, I strike-out the claim in accordance and pursuant to CPR 3.4(2) and enter judgment for the defendant under CPR 24.2. 

(End of judgment)
(Discussions follow as to costs)