Appeal Court rules HRA incompatibility

In a groundbreaking case, the Court of Appeal has made its first ever ruling that an existing statute is incompatible with the Human Rights Act (HRA).

Three Appeal Court judges have ruled that the Consumer Credit Act 1974 does not comply with the HRA because it denies a fair deal to lenders. It is one of the first declarations of incompatibility made since judges were given the power last October, and the first made by the Court of Appeal.

The ruling comes following the adjournment of a case last November when the Court of Appeal said that there may be grounds for such a decision.

The case involves pawnbroker First County Trust and borrower Penelope Wilson. She pawned her car in exchange for a £5,000 loan, but in preparing the documents the pawnbroker wrongly added the £250 charge for preparing the document to the total and said that the amount of the loan was £5,250.

Under the Consumer Credit Act the court does not have the power to enforce the agreement if the amount of the loan is stated incorrectly, so Wilson got her car back and the £6,900 she paid for the loan, interest and charges.

The pawnbroker was represented by London law firm Park Nelson, led by corporate partner Tim Ford. He instructed Philip Havers QC of 1 Crown Office Row (Robert Seabrook QC) and William Hibbert of Gough Square Chambers.

Havers says: “I got brought in at the stage when the Court of Appeal had already decided the issues that arose purely under the Consumer Credit Act, but had identified a potential incompatibility between the HRA and the Consumer Credit Act. It’s one of the first cases in which a declaration of incompatibility has been made, so that alone makes it very significant. The fact that the declaration has been made by the Court of Appeal is obviously quite significant as well.”

Richard Salter QC of 3 Verulam Buildings and Martin Young of 9 Stone Buildings acted on a pro bono basis for Wilson, while Jonathan Crow of 4 Stone Buildings was instructed by the Treasury Solicitor for the Secretary of State as intervener.

Havers says that despite the judgment there is not expected to be a flood of declarations of incompatibility by the courts now. “I think the expectation is that, by and large, the courts will find a way of interpreting our English statutes in a way that’s compatible with the act,” he says.