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Wilson v First County Trust Limited (2), House of Lords, 10 July 2003

16 July 2003
The issues

Consumer Credit Act 1974 Section 127(3) Human Rights – Credit

The facts

The Secretary of State of Trade and Industry appealed against the declaration of incapability made by the Court of Appeal in May 2001 after allowing an Appeal by the Claimant from a decision of the Judge that a Loan Agreement made between her and the Defendant was enforceable. The Court of Appeal had held that the effect of Section 127 and Section 65 of the Consumer Credit Act was legitimate in terms of its aim but not in terms of its means. The means was inflexible and could have been achieved through judicial control. It was not possible to read or give effect to the relative provisions of the 1974 Act in the way it was compatible with convention rights.

The Secretary of State appealed.

The decision

1. Jurisdiction to make a declaration of incompatibly did not arise unless the Court had construed the legislation in accordance with Section 3 (1) of the Human Rights Act and had concluded that it was not possible to read and give effect to it in a way which was compatible with convention rights.

2. It was not Parliament’s intention that the Application of Section 3 of the Act should have the effect of altering existing rights and obligations of parties to an Agreement made before Section 3 came into force in October 2000.

3. If Section 127(3) of the 1974 was construed in the way which was favourable to the Defendant it would deprive the Claimant of the protection she acquired when she entered into the Agreement.

4. Therefore for the purposes of identifying the parties rights and obligations under the Agreement the 1974 Act was to be interpreted without reference to Section 3(1).

Since Section 3 was not available to the Court the Court’s powers under Section 4 to make a declaration of incapability did not arise.

5. Even if the Court had jurisdiction Section 127(3) was not incompatible with convention rights. It restricted the creditor’s rights but did not bar access to the Court to determine whether or not the Agreement was enforceable. There was therefore no breach of Article 6. It was a reasonable social aim to deprive the lender of all rights under an Agreement including rights to security unless statutory requirements had been strictly complied with. Although in some cases this would have unfair results it was a proportionate means of achieving a legitimate claim namely consumer protection. There was therefore no breach of Article 1 of the first protocol.

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