28 Mar 2014

Aberdeen Man Wins 16 Year Legal Battle over Laptop

Aberdeen Man Wins 16 Year Legal Battle over Laptop

Rachel Main, Solicitor, provides a summary of the recent landmark Supreme Court decision of Durkin v DSG Retail and Another and the impact it will have on consumers in the UK.

Rachel Main, Solicitor, provides a summary of the recent landmark Supreme Court decision of Durkin v DSG Retail and Another and the impact it will have on consumers in the UK.

An Aberdeenshire man has won a 16 year battle with DSG Retail Limited (trading as PC World) and HFC Bank (now owned by HSBC) over the purchase of a laptop in 1998.

Richard Durkin bought a laptop at PC World in 1998. These were the days before wifi, and he wanted to make sure he could get internet access. He asked if the model had an internal modem, and the sales assistant was unsure. The box could not be opened, so it was agreed that if the laptop did not have a modem it could be returned.

Mr Durkin paid a £50 deposit and financed the rest of the £1,500 purchase with a credit agreement with HFC Bank. When he opened the box he realised that there was no modem and returned it to the store the next day. He asked for a refund of his deposit and for the cancellation of the credit agreement. The store manager refused.

Mr Durkin told HFC Bank that he had handed the laptop back and was not going to make any payments. Despite this he was repeatedly chased for payment by HFC Bank who eventually told Credit Reference Agencies Experian Ltd and Equifax Ltd that Mr Durkin was defaulting on his payment. This meant that Mr Durkin then had difficulty obtaining credit for other purchases. Importantly, at no stage did HFC Bank check whether or not Mr Durkin was entitled to cancel the agreements as he said he had done.

Mr Durkin started his legal battle in 2004 at Aberdeen Sheriff Court. The Sheriff agreed with him that he had cancelled both the contract of sale and the credit agreement. Mr Durkin claimed £250,000 in damages based on the damaged to his financial credit, loss from interest charges caused by his inability to exploit 0% interest offers and loss of capital gain caused by his inability to put down a large deposit on a Spanish property. He was awarded damages in the region of £120,000.

Both Mr Durkin and HFC Bank appealed the Sheriff’s decision and while HFC Bank were successful in the first appeal, Mr Durkin continued to appeal to the Supreme Court. They issued their unanimous judgement on 26th March 2014.  The Supreme Court found that Mr Durkin was entitled to cancel the credit agreement and that he had validly done so by giving written notice to HFC Bank in 1999.

The Supreme Court noted that, when Mr Durkin wrote to HFC Bank advising that he had returned the laptop, HFC Bank had a duty to investigate that claim. The Court held that the Bank should have reasonably satisfied itself that the credit agreement remained enforceable before reporting to credit agencies that Mr Durkin was in default. HFC Bank made no such enquiries, accepting without question, PC World’s position that he had not been entitled to cancel the contract.

The Supreme Court allowed an award of damages of £8,000 for damage to Mr Durkin’s financial credit but would not restore the Sheriff’s award of damages of £120,000 as sought by Mr Durkin. Unfortunately for Mr Durkin, the Supreme Court did not have power to review the facts found by the lower courts, only the legal conclusions. He could not establish to the lower courts there was enough of a connection between the adverse credit references and his inability to fund the purchase of the Spanish property. He also did not provide enough evidence that he would have made use of any 0% interest products offered.

Mr Durkin, the consumer, won this case, and it can be seen as a wider “win” for UK consumers. The case basically means that Lenders may have to pay compensation if they report borrowers who claim to have good reasons for not paying to Credit Reference Agencies without carrying out proper investigations. Failure to do so, will now allow those wrongly referred to Credit Reference Agencies to raise a possible claim for compensation. 

Rachel Main, Solicitor


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