Credit file entry fight reaches Supreme Court

Richard Durkin says the bank ruined his credit record. Picture: Getty

Richard Durkin, 44, from Aberdeen, claims the HFC bank ruined his credit rating after he tried to back out of an agreement to buy the £1,499 computer from PC World in 1998.

The offshore construction surveyor is seeking a six-figure sum, arguing that by, in his view, being wrongly blacklisted with credit agencies, he was unable to buy a home in Spain.

Mr Durkin had handed over £50 to PC World and signed a credit agreement with the HFC Bank – part of the HSBC group – for £1,449 to cover the balance.

The father of two claims that when he bought the machine, he was told by a sales assistant at the store in Aberdeen it could be returned and his money refunded if it had a problem.

But when he discovered the laptop did not have an inbuilt modem, he was told by the manager on duty the next day that he could not hand it back.

Though Mr Durkin sued and was eventually paid back the £50 by PC World, HFC Bank said he was still required to make payments under the terms of the credit agreement.

The bank then blacklisted Mr Durkin until 2005, which meant he was unable to secure credit and raise enough money to buy a family home in Spain in 2003.

He said: “People don’t realise how much damage a default on your credit record does until they actually have one.

“It’s like I’m in a financial jail. If I lose, I go bankrupt – simple as that.”

After receiving help from Andrew Smith, a leading Scottish QC, the charity LawWorks and the Law Society of Scotland, Mr Durkin’s case began yesterday before a panel of five judges, who will decide whether he was the victim of an injustice, according to the reports.

In 2008, Aberdeen Sheriff Court ruled Mr Durkin was entitled to reject the laptop and cancel the sale and the credit agreement, and awarded him damages of £116,000.

However, the decision was overturned two years later 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 Mr Durkin was not entitled to cancel his credit agreement.

Launching Mr Durkin’s appeal at the Supreme Court, reserved for cases “of the greatest constitutional importance”, QC Mr Smith said: “This case is about when a consumer goes into a credit or debit agreement and whether he has the right to leave that agreement.

“We have the surprising situation from the consumer’s point of view, that he paid for something he no longer has.”

Outlining HFC Bank’s case to the panel of five justices –Lady Hale, Lord Wilson, Lord Sumption, Lord Reed and Lord Hodgewill – Alistair Clark QC said that in rejecting the laptop, Mr Durkin claimed he had rescinded the contract, but that “the supplier says there is no basis for that”.

Mr Clark added that Mr Durkin’s case relied upon whether he had a legal right under the Consumer Credit Act, which states that a company supplying credit is “jointly and severally liable for any breach of contract or misrepresentation by the company selling the goods”.

“The consumer is saying that he can rescind the sales contract so he can rescind the credit contract,” he said.

“The question must be: what is the basis for the consumer rescinding the credit agreement?”

But Lord Sumption said Mr Durkin’s credit contract with HFC Bank seemed to be dependent upon there being an ongoing sales contract with PC World, which had already been “lawfully” terminated.

He added: “You have lawful rescission [cancellation of an agreement] so the money, on the face of it, has to be paid back from the supplier to the creditor who paid it. That surely is the only and inevitable conclusion”.

The judicial bench will decide in a reserved judgment whether there was a valid loan agreement between Mr Durkin and HFC Bank. The hearing continues.