A ruling by the Supreme Court this week could have major implications for consumers, as it means that lenders will now have to check the validity of debts before putting black marks on customers’ credit records, something that could affect millions of credit agreements.
Richard Durkin, an oil worker from Aberdeen, bought a laptop at PC World in the town in 1998 and signed a credit agreement for it with HFC for £1,499, paying a £50 deposit at the time.
However, he returned the computer the next day because it did not have an internal modem, and asked for the credit agreement to be cancelled but HFC said he had to keep making payments. After he refused, the bank issued a default notice.
It told credit reference agencies he had defaulted and his name remained on a credit register for several years but Mr Durkin took legal action, arguing that he had validly cancelled the credit agreement when he returned the goods.
Mr Durkin eventually got the £50 back from PC World but HFC said he was still required to make payments under the terms of the credit agreement. However, in 2008 Aberdeen Sheriff Court ruled that he had been entitled to reject the laptop and cancel the sale and the credit agreement and awarded him damages of £116,000.
However, judges at the Court of Session in Edinburgh overturned this decision later after Mr Durkin himself appealed against the size of the damages, and the Supreme Court in London did not have the power to reinstate them, even though it ruled in his favour. However, he was awarded £8,000 for “injury to his credit”
Speaking after the ruling, Mr Durkin said he was disappointed that the Court could not restore the full damages, but hailed the decision as a great victory for all consumers.
Mackrell Turner Garrett Solicitors in London
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