High Court declines to extend debtor-creditor-supplier arrangements

The High Court has ruled in favour of NatWest in its judgment of 10 October 2022 in the case of Steiner v National Westminster Bank plc [2022] EWHC 2519 (KB).

Mr and Ms Steiner had paid for a timeshare agreement with Mr Steiner’s NatWest credit card. The timeshare agreement was with Club La Costa Vacation Club Ltd (“CLC“), but the payment of £14,000 was in fact taken by First National Trustee Company Ltd (“FNTC“). FNTC were a member of the Mastercard network. Ms Steiner brought a claim against NatWest whilst acting as personal representative of Mr Steiner’s estate for reimbursement under the consumer protection provided by the CCA for breach of contract in debtor-creditor-supplier arrangements. The judge at first instance held in favour of NatWest. The latest judgment comes following Ms Steiner’s appeal.

Ms Steiner’s claim needed to demonstrate that the agreement was made ”under pre-existing arrangements”, or in contemplation of “future arrangements” and extended to CLC under section 12(b) CCA, in order for the protection to apply. Ms Steiner’s initial case argued that such arrangements did exist because there was a Deed of Trust between CLC and FNTC under which CLC would receive payment, thereby bringing CLC within the remit of the CCA for debtor-creditor-supplier agreements. NatWest argued that even if this arrangement was in place, this did not constitute an “arrangement” between NatWest (as creditor) and CLC (as supplier) under 12(b) of the CCA.

In the appeal, Ms Steiner’s counsel argued that the definition of arrangements in the CCA would include a situation whereby a beneficiary of a trust would receive payment in the future. It was argued that CLC would receive such payment from FNTC under the Deed of Trust. NatWest’s counsel argued that by being party to the Mastercard network, they place trust in other members of that network but not third parties who are not part of it. It was argued it was an essential element that the Court had to take into account. In this case, NatWest did not know about CLC, whereas, in contrast, Mr Steiner would have seen that his payment was not going to them but to a separate entity.

The High Court dismissed the appeal having satisfied itself that at the time of the transaction there were no “pre-existing arrangements” between NatWest and CLC. The Judge found it difficult to envisage (without evidence of NatWest’s state of mind) that a bank who issues a Mastercard to its customer and makes a credit card agreement in relation to that card makes that agreement under, or in contemplation of, any arrangements other than the Mastercard network. Therefore, the existence of the Trust Deed did not bring CLC within scope. The Court also noted that the ‘ordinary wording’ of section 12(b) of the CCA does not go as far as to say that NatWest’s agreement with Mr Steiner was under both the Mastercard network and the Deed of Trust, regardless of whether the Deed of Trust was in place at the time of the agreement or not.

The judgment cited the case of Office of Fair Trading v Lloyds TSB Bank Plc (2007) to support the rationale for its interpretation of the CCA.

Scott Nodder