Cooper v The Freedom Travel Group Ltd

Factual and Procedural Background

In October 2014, the Appellant's husband entered into a contract with Company A for a package holiday to Greece scheduled for May 2015. The husband used a credit card issued by the Respondent under a credit agreement regulated by the Consumer Credit Act 1974 ("CCA 1974"). The credit agreement was solely between the husband and the Respondent; the Appellant was neither a party nor an additional cardholder. The husband paid the deposit for the holiday using the credit card and later paid the balance by other means. The holiday invoice was addressed to the husband as the contracting party, with the Appellant named as an "other passenger". Travel insurance was obtained separately.

While on holiday, the Appellant suffered a fracture. Upon return, she brought a claim for personal injury and loss against Company A under the Package Travel Regulations 1992 ("the 1992 Regulations"), relying on a statutory cause of action that holds the holiday company liable for damages caused by failure or improper performance of the contract. The Appellant was considered a "consumer" under the 1992 Regulations as an "other beneficiary" of the principal contractor (her husband).

The Appellant accepted a liability compromise offer from Company A in February 2018, with a quantum trial pending. In September 2019, Company B, the parent company of Company A, entered liquidation, and proceedings against Company A were stayed. The original defendant was self-insured for the first £2,475,000 of any claim, precluding insurance claims by the Appellant.

In January 2020, the Appellant applied to add the Respondent to the proceedings under CPR 19.5, alleging joint and several liability under section 75 of the CCA 1974. The Deputy District Judge dismissed this application, holding that the Appellant was not a "debtor" under the CCA 1974 and that the limitation period would not be disapplied due to prejudice to the Respondent. The Appellant appealed, challenging these findings. The appeal was dismissed by HHJ Simpkiss in September 2021, who found the term "debtor" to have a plain and unambiguous meaning limited to contractual parties receiving credit. Permission to appeal was later granted on the primary ground regarding the interpretation of "debtor".

Legal Issues Presented

1. Whether the term "debtor" in section 75 of the Consumer Credit Act 1974 should be interpreted as applying only to contractual parties to a credit agreement or also to third party beneficiaries of such an agreement.
2. If the Appellant is considered a "debtor" under section 75, whether the limitation period under the Limitation Act 1980 should be disapplied due to prejudice to the Respondent.

Arguments of the Parties

Appellant's Arguments

• The Appellant contended that she was a "debtor" within the meaning of the CCA 1974 despite not having a credit agreement with the Respondent, arguing this follows from the natural meaning of the statute or, alternatively, from a purposive interpretation consistent with EU law.
• Section 75 overrides privity of contract and applies to any person who uses a credit card to pay for contractual goods or services, including third party beneficiaries.
• Reliance was placed on the House of Lords decision in Office of Fair Trading v Lloyds TSB Bank, which held section 75 applies to overseas transactions and where no pre-existing relationship exists between creditor and supplier.
• The Appellant argued that if section 75 excluded her, it would have explicitly stated so, especially given the broad definition of "credit" in section 9 of the CCA 1974.
• She asserted a contractual claim under the 1992 Regulations as a "consumer" and "other beneficiary," thus entitling her to a claim under section 75.
• The Appellant maintained that the Directive and the 1992 Regulations aim to protect consumers, including those not party to the contract, and that domestic law must be interpreted harmoniously with EU law per the Marleasing principle.
• She submitted that the Respondent, as creditor, takes the benefit and burden of the transaction, supporting a broad interpretation of "debtor".

Respondent's Arguments

• The Respondent described the CCA 1974 as a comprehensive and coherent code with strict definitions, including "debtor," which refers only to the contractual debtor.
• The Appellant was not a party to the credit agreement or the holiday contract and did not receive credit, nor had contractual rights or obligations under the credit agreement.
• The Respondent argued that section 75 envisages claims only by the contractual debtor against the supplier and that claims under the 1992 Regulations are statutory and not contractual claims.
• Reliance was placed on the Supreme Court decision in X v Kuoni Travel Ltd, distinguishing between breach of contract claims and claims under the 1992 Regulations.
• The Respondent submitted that the Marleasing principle does not apply as the CCA 1974 is not implementing legislation and does not conflict with the Directive, which targets package holiday protection, not personal injury claims.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by examining the statutory definition of "debtor" in section 189 of the CCA 1974, which restricts the term to an individual party to a consumer credit agreement who receives credit. The court emphasized the importance of the statutory scheme's coherence and the precision of definitions within the Act, noting that the term "debtor" is used consistently and is a term of art. It rejected the Appellant's argument for a broader interpretation that would include third party beneficiaries, reasoning that credit involves a contractual right to defer payment, which only the contractual debtor possesses.

The court acknowledged the Appellant's reliance on EU law and the Package Travel Directive but distinguished the CCA 1974's purpose from that of the Directive and the 1992 Regulations. It held that the Directive is a targeted consumer protection scheme specific to package travel and does not conflict with the CCA 1974. The statutory claim available to the Appellant under the 1992 Regulations does not equate to a contractual claim under the credit agreement.

Applying established principles of statutory interpretation, including the presumption of consistent use of terms and the rule that clear statutory language must be given effect, the court found no ambiguity in the term "debtor" and declined to apply a purposive construction that would override the plain meaning. The court further noted practical difficulties and potential legal uncertainty that would arise if the definition were expanded to include third party beneficiaries.

Consequently, the court concluded that the Appellant was not a "debtor" under section 75 and thus could not bring a claim against the Respondent under that provision. The court also found that the Marleasing principle did not require a different interpretation.

Holding and Implications

The court DISMISSED the appeal on the primary ground that the Appellant is not a "debtor" within the meaning of section 75 of the Consumer Credit Act 1974.

This decision means the Appellant cannot pursue a claim against the Respondent under section 75, as she was not a party to the credit agreement and did not receive credit under it. The court did not address the second ground of appeal concerning the limitation period as it was dependent on the success of the first ground. No new legal precedent was established beyond affirming the clear statutory interpretation of "debtor" in the CCA 1974 and the distinction between statutory claims under the Package Travel Regulations and contractual claims under the CCA 1974.