In 1998, Richard Durkin bought a laptop in Aberdeen. Neither he, nor PC World, nor HFC Bank (who financed his purchase) could have known that Richard Durkin was making legal history.
He paid £50 up front for the laptop, and signed a credit agreement with HFC Bank for the remainder of the £1,499 price tag. He was also given assurances by the sales assistant that the laptop could be returned if there were any problems, defects or issues.
Upon discovering at home that the laptop had no inbuilt modem, Mr Durkin returned the laptop to the PC World store the very next day. Although eventually refunded his £50, HFC Bank did not consider his credit agreement void upon the return of the laptop- despite the consumer’s repeated assertions that the initial contract of sale was now cancelled by the return of the laptop- and still sought payment from Mr Durkin.
Mr Durkin went to court over his inability to cancel his credit agreement, and HFC’s demands for payment. Instead of being a matter settled out of court, or at a local magistrate’s court, the matter escalated legally. In the ensuing proceedings, Mr Durkin’s credit rating, (and therefore his ability to get credit and loans) had been affected by his essentially defaulting on the credit agreement with HFC Bank (in their eyes). Despite Mr Durkin’s repeated efforts to quite legally cancel his credit agreement, HFC did not consider the agreement void, and so pursued him for the payments due which they considered he should still make. The effect of this was to severely damage Mr Durkin’s credit rating. Loss of capital gains was also an issue before the courts, as Mr Durkin was unable to get the required finance to purchase properties in Spain as he had intended, and indeed started the process for.
Aberdeen Sheriff’s Court in 2008 found for Mr Durkin, and ruled that he could legally return the defective goods, and (sic) cancel the credit agreement. Damages were awarded to the value of £116,000. The key of the matter, the Court held, was in s.75 of the Consumer Credit Act (1974). Applying s.75, the various courts had to establish whether in fact Mr Durkin had legally rescinded the contract, and had the ability to do so under the terms of the 1974 Act. In that matter, the various judges who presided over the case seemingly though differently.
In appeal and cross appeal under the various heads of claim, the case made its way to the First Division of the Inner House of Session (Scotland’s Appeal Court). The Inner House overturned the lower court’s verdict. Upon another appeal, the case made its way from Edinburgh to London, and was heard by the Supreme Court for final adjudication.
The leading judgement was given by Lord Hodge (the Scottish judge on the Supreme Court). In his brief and concise 13 page judgement (with which the other judges agreed), Lord Hodge found in favour of Mr Durkin, allowing his appeal. However, only £8,000 in damages was awarded to Mr Durkin after 16 years of litigation (Lord Hodge was legally unable to restore the damages awarded by the Sheriff’s Court).
Although a shallow victory for Mr Durkin- the case of Durkin (Appellant) v DSG Retail Ltd and another (Respondents) (Scotland) is a great triumph for consumer rights.
Applying Lord Hodge’s verdict, consumers making purchases under a credit agreement can now legally cancel the credit agreement if the purchased goods are rejected on the grounds of being faulty or similar. Additionally, any lender that seeks to blacklist or negatively affect a consumer’s credit rating upon default of a credit agreement now owes the consumer a duty of care to investigate thoroughly if the consumer is stating that they have cancelled the purchase funded by the agreement, and therefore the agreement itself. Indeed, Lord Hodge found that HFC Bank (now owned by HSBC) had a duty to establish the truth behind Mr Durkin’s repeated assertions that the agreement had indeed being terminated- and that the bank had failed to act on, and investigate, those assertions.
Furthermore, a major result of the case is that banks and other financial institutions now have to be especially careful, and be absolutely certain of their facts, before informing credit reference agencies that a customer is in default. In these financial times, such protection as regards negative credit reports is very welcome indeed.
The case is finally over for Richard Durkin, after a 16 year odyssey that has cost him very dearly, and not just financially. Understandably angry at the Supreme Court verdict, in a statement he said that “I am disappointed that the Supreme Court was unable to restore to me the full damages awarded by the sheriff – even though it was clear that they were sympathetic to my position on this… This decision is a great victory for all consumers and I am proud to have been the driving force behind it.”
Despite his own lack of legal victory, Richard Durkin leaves a legal legacy which is to the benefit of a great many consumers.
The final word in the case goes to Lord Hodge. Quoting from his judgement at paragraph 35: “There may be cases in which a creditor, having made enquiries, acts reasonably in reaching the view that the debtor’s assertions are unfounded. This is not such a case”.
Such reasonable actions, and acting according to certain duty of care to make accurate statements (applying the famous case of Hedley Byrne & Co Ltd v Heller & Partners), are already a part of tort (civil) law, and banking and financial regulations, due diligence, and consumer rights. Mr Durkin’s case serves to greatly reinforce and strengthen those consumer rights, and to place the onus squarely on the financial institutions to act reasonably as regards the consumer, according to Lord Hodge.