Members of Fountain Court Chambers represented both sides in the recent Commercial Court case of NRAM plc v McAdam [2014] EWHC 4174 (Comm) in which judgment was handed down on Wednesday 10 December 2014 by Mr Justice Burton. John Taylor QC and James McClelland acted for the borrowers (instructed by Simmons & Simmons) and Patrick Goodall QC acted (with Malcolm Waters QC) for NRAM (instructed by Ashurst).

The proceedings were brought by NRAM (the successor to Northern Rock) to obtain declaratory relief regarding the rights of certain borrowers, totalling approximately 41,000, who entered into unsecured credit agreements as part of a product called the ‘Together Mortgage’, which were documented as though they were regulated by the Consumer Credit Act 1974 (“CCA”) even though they were not.  Subsequently, NRAM issued statements that did not comply with the requirements of the CCA, which, if the agreements had been regulated, would have had the consequence that NRAM could not charge interest for the period in respect of which the statements were non-compliant.  The issue in the proceedings was whether, because of the way in which the non-regulated agreements were documented, the borrowers were nonetheless entitled to the rights and remedies under the CCA including in relation to the non-compliant statements (the remediation of which would cost approximately £250 million).

In resolving this issue in favour of the borrowers, Mr Justice Burton found that the borrowers were contractually entitled to the rights and remedies applicable to a regulated agreement under the CCA so far as capable of being applied to a non-regulated agreement, which included those relating to the non-compliant statements.  He also found that for the purposes of the law on estoppel, NRAM’s documentation was sufficient to give rise to a shared assumption and a representation to the effect that, whether or not the agreement was regulated under the CCA, it was to be treated as if it were.

A copy of the judgment is available here.