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Salat v Barutis, Court of Appeal, 20 November 2013

16 December 2013

Credit hire – Cancellation of Contracts made at a Consumers Home or Place of Work etc – Regulations 2008

The facts
In April 2009 the claimant had been knocked off his bicycle by the defendant when the defendant carelessly opened his car door. The bike was damaged and turned out to be beyond repair. The claimant needed a replacement to get him to work so he hired one from a credit hire company BLD Group Limited. BLD contacted him and agreed to make a bike available to him on credit. On the 9 May 2009 an employee of BLD brought a bike to Mr Salat’s home address. Mr Salat completed the paperwork including a credit hire agreement and was given possession of the bike under the terms of the agreement. The agreement lasted for 47 days and the total amount under it came to £5,718.53. Under the terms of the agreement BLD had the right to pursue a claim against the defendant in Mr Salat’s name. Proceedings were commenced. On the 1 December 2011 the district judge dismissed the claim on the basis that BLD’s failure to comply with the regulations rendered the credit hire agreement unenforceable against Mr Salat who therefore had suffered no loss for which he could recover from the defendant. The matter came on appeal before the judge who upheld the decision. The claimant appealed to the Court of Appeal.

The decision
The regulations applied to contracts including consumer credit agreements between consumers and traders of the supply of goods or services to the consumer made during a visit by the trader to the consumer’s home. Under the regulations the consumer had the right to cancel a contract to which the regulations applied within the cancellation period. The trader had to give the consumer a written notice of his right to cancel and the notice had to be given at the time the contract was made. Whether the contract was in writing, either wholly or in part, the notice had to be incorporated in the same document. Finally a contract to which the regulations applied was not enforceable unless the trader had given the consumer notice.

The district judge and the judge had found that the contract had been made at Mr Salat’s home when he signed the paperwork and accordingly the contract was subject to the regulations. He did not include a cancellation notice and was therefore unenforceable. Mr Salat could not therefore be required to pay the hire. The claimant argued that the contract had been made on the telephone when BLD’s representative contacted the claimant. That was at odds with commercial common sense and everyday experience. There was no evidence that Mr Salat thought he was entering into a contract on the telephone or that BLD intended to do so. The claimant also argued that the word “made” used in the regulations should be understood as including the whole of the exchanges between the parties culminating in the concluded agreement. Therefore it included the telephone conversation between BLD and the claimant. That had not been a case of cold calling but a conversation in which BLD had obtained information which was of crucial importance – namely whether Mr Salat had been responsible for the accident or not. To give the word “made” the extended meaning contended for by the claimant would be a recipe for confusion. Whenever there had been some contact between the parties before the home visit it would be open to the trader to argue that something of significance had passed between them. Moreover it was at odds with the decision of the Court of Appeal in Swift v Robertson [2012].

The effect of failing to comply was that the contract was unenforceable against the consumer. In Dimond v Lovell the House of Lords had confirmed that in such circumstances where the contract was unenforceable against Mrs Dimond she had had the use of a car at no cost to herself and had therefore suffered no loss and the claim failed. The claimant attempted to distinguish the decision in Dimond v Lovell on the basis that the consumer should be able to decide for himself whether to maintain in force for the benefit of both parties a contract which did not contain a notice of the right to cancel. They are in support of this view by the fact that Mr Salat had affirmed the contract by giving a witness statement and was actively supporting the proceedings. The Court of Appeal tended to the view that the regulations did not permit the consumer to affirm the contract that would otherwise be enforceable against him but it was not necessary to decide the point because nothing that Mr Salat had done could be regarded as amounting to an unequivocal statement that he was willing to be bound. This was not surprising since he would be unwilling to incur liability for BLD’s charges. This attempt to distinguish the decision in Dimond v Lovell failed nor could Mr Salat recover general damages for the loss of the use of his bicycle. In Dimond v Lovell the House of Lords considered whether to recognise an exemption to the rule against double recovery precisely on this ground and held that it would not be appropriate to do so.

Appeal dismissed.

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