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Supreme court victory for man in 16-year battle with HSBC and PC World Supreme court victory for man in 16-year battle with HSBC and PC World
(about 1 hour later)
A man embroiled in a massive 16-year legal battle over a laptop is celebrating a victory of sorts in his David-and-Goliath case after the supreme court found in his favour.A man embroiled in a massive 16-year legal battle over a laptop is celebrating a victory of sorts in his David-and-Goliath case after the supreme court found in his favour.
But Richard Durkin, 44, who claimed a division of HSBC had "annihilated" his credit rating, was left bitterly disappointed that he will not receive the six-figure sum he was seeking. Instead, because of a legal technicality, he will have to make do with £8,000 damages. Richard Durkin, 44, who claimed a division of HSBC had "annihilated" his credit rating, was left bitterly disappointed that he will not receive the six-figure sum he was seeking. Instead, because of a legal technicality, he will have to make do with £8,000 damages.
However, legal experts said the unanimous judgment in Durkin's favour could unleash a tidal wave of similar claims from people who argue that their lives were ruined after black marks were put on their credit files.
Andrew Smith QC, who represented the married father of two in court, indicated the ruling would make it much harder for banks and other financial firms to report people to credit reference agencies, leading to them being blacklisted for credit. He said the judgment meant that where a consumer disputes that he or she defaulted on a loan or credit agreement, the bank or firm cannot put a default notice on their credit file until the matter has been resolved.
"It's victory, but they didn't have jurisdiction to help me in the end, which is disappointing," Durkin told the Guardian immediately after the judgment. "But I'm pleased for the consumer. A lot of people will benefit from this – it's massive.""It's victory, but they didn't have jurisdiction to help me in the end, which is disappointing," Durkin told the Guardian immediately after the judgment. "But I'm pleased for the consumer. A lot of people will benefit from this – it's massive."
Had Durkin lost, he would almost certainly have faced bankruptcy, as he could have been hit with a legal bill for an estimated £300,000, on top of his own £250,000 legal bill.Had Durkin lost, he would almost certainly have faced bankruptcy, as he could have been hit with a legal bill for an estimated £300,000, on top of his own £250,000 legal bill.
His legal team is now likely to argue that HFC Bank, a division of HSBC, and PC World – the other party in the case – should pay their own costs, plus at least some of Durkin's.His legal team is now likely to argue that HFC Bank, a division of HSBC, and PC World – the other party in the case – should pay their own costs, plus at least some of Durkin's.
Durkin took his case to the UK's highest court after claiming HFC wrecked his credit rating following a dispute over a credit agreement he signed when he bought the £1,500 laptop at his local PC World in Aberdeen in 1998.Durkin took his case to the UK's highest court after claiming HFC wrecked his credit rating following a dispute over a credit agreement he signed when he bought the £1,500 laptop at his local PC World in Aberdeen in 1998.
He argued that being wrongly blacklisted meant he was unable to buy a home. Papers lodged with the court said Durkin alleged the bank's conduct "amounted to extortion".He argued that being wrongly blacklisted meant he was unable to buy a home. Papers lodged with the court said Durkin alleged the bank's conduct "amounted to extortion".
Giving the judgment, Lord Hodge said Durkin had "validly rescinded" the credit agreement. The saga began on 28 December 1998, when Durkin, an offshore construction surveyor, went to PC World to buy a laptop. The sales assistant pointed out a particular model, but it was in a sealed box, so it was not possible to check whether it had the right modem. It is claimed that the assistant suggested Durkin buy the laptop, saying that if there was a problem he could return it and get his £50 deposit back. Durkin bought the computer, handed over his £50 and signed a credit agreement with HFC Bank, which provided PC World's in-store finance, for £1,449 to cover the balance. When he got home he found the laptop did not have an built-in modem, so he took it back the next morning. But the manager on duty refused to take the computer back, refund his £50 or cancel the agreement.
Durkin left the laptop at the shop, then went to work offshore, but when he got home a fortnight later he found the laptop waiting for him. He again took it back to the shop, where it stayed, and later sued PC World for the £50. The company paid up without admitting liability. Durkin assumed that was the end of the matter, but HFC Bank said he was still required to make payments under the terms of the agreement. He says he explained what had happened, but the bank warned that if he did not pay up, possible consequences included "difficulty in the future in obtaining a mortgage or other credit".
Sure enough, HFC Bank put a default notice on his Experian and Equifax credit files. Durkin says he tried without success to get these black marks removed, and they stayed on his files until at least 2005. This had a major impact on his finances and, he claimed, prevented him from buying a home in Spain in 2003.
The case eventually made it to Aberdeen sheriff court where, in March 2008, Durkin won his case. Sheriff James Tierney ruled he had been entitled to reject the laptop and cancel the sale and the credit agreement. The court awarded damages of £116,000 to Durkin. But, two years later, that decision was overturned by judges at the court of session in Edinburgh. They ruled that even though the sale of the laptop had been cancelled, the contract of sale and the contract of loan were separate agreements, and Durkin was not entitled to cancel his credit agreement. That meant the information put on his file about being in default was factually accurate, the court added.
Giving the judgment at the supreme court, Lord Hodge said Durkin had "validly rescinded the credit agreement by giving notice to HFC in about February 1999". But, in terms of the damages Durkin was seeking, Hodge said the Court of Session Act 1988 "limits the role of the supreme court in relation to such appeals", and that therefore the damages resulting from HFC's "breach of its duty of care" were confined to "injury to Mr Durkin's credit in the sum of £8,000".
Hodge said the bank could have tested the effectiveness of the credit agreement by suing Durkin, adding: "It should not have intimated the default without a reasonable basis for the belief that it had occurred."
The legal row is seen as an important test case for thousands of people who say their lives have been ruined after black marks were put on their credit files, and is likely to open the floodgates to many similar cases.The legal row is seen as an important test case for thousands of people who say their lives have been ruined after black marks were put on their credit files, and is likely to open the floodgates to many similar cases.
Durkin said: "Although 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 – his decision is a great victory for all consumers, and I am proud to have been the driving force behind it. As a result of the decision, no consumer will have to endure again what I had to put up with: the loss of the ability to buy a family home because of wrongful blacklisting. Durkin said: "Although 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 they were sympathetic to my position – this decision is a great victory for all consumers, and I am proud to have been the driving force behind it. As a result of the decision, no consumer will have to endure again what I had to put up with: the loss of the ability to buy a family home because of wrongful blacklisting.
"Taking a case to any court is a huge stress, but taking it to the highest court in the land with all the risks that go with it was the most stressful thing that anyone could voluntarily put themselves through."Taking a case to any court is a huge stress, but taking it to the highest court in the land with all the risks that go with it was the most stressful thing that anyone could voluntarily put themselves through.
"But sometimes you have to do what is right and not what is easy. This case was not all about me – it was about principle for all consumers. I always felt that PC World and HFC Bank had acted disgracefully towards me, and I have now been proved right.""But sometimes you have to do what is right and not what is easy. This case was not all about me – it was about principle for all consumers. I always felt that PC World and HFC Bank had acted disgracefully towards me, and I have now been proved right."
Durkin said he was grateful to his legal team and everyone who had worked on a pro bono basis to take the case.Durkin said he was grateful to his legal team and everyone who had worked on a pro bono basis to take the case.
"But I am most grateful for an end to this matter now, having fought a long and difficult battle which at last is over," he added."But I am most grateful for an end to this matter now, having fought a long and difficult battle which at last is over," he added.
Meanwhile, Smith said he had already received instructions from about 20 people who wished to follow Durkin's example in taking legal action on the grounds that they had suffered as a result of defaults being wrongly put on their files.
He said: "There may be many people who have in the past been wrongly listed as being in default who potentially have rights to litigate now."
The case raised significant issues as to whether credit reference agencies such as Experian and Equifax "are exposed to the risk of litigation if they incorrectly report or list someone as being in default".