Abbey National Plc and others v The Office of Fair Trading: CA 26 Feb 2009

The OFT had sought to enquire as to the fairness of the terms on which banks conducted their accounts with consumers, and in particular as to how they charged for unauthorised overdrafts. The banks denied that the OFT had jurisdiction, and now appealed against an order against them.
Held: An assessment of the fairness of the Relevant Charges in this case was not excluded by regulation 6(2)(b), and the appeal was dismissed. The contracts between banks and their customers were covered by the 1999 regulations, and the OFT could investigate. The 1999 Regulations were to be interpreted so as to give effect to the Directive, and the travaux preparatoires are a legitimate aid to the construction of the Directive. Those works showed that the underlying idea of excluding anything from the assessment for fairness was that there should be excluded only that which could be expected to result from the contractual freedom of the parties to negotiate the particular term. That might exclude the core terms of a contract but should not exclude ancillary terms. In the circumstances the Relevant Charges were not part of the core or essential bargain with the customer.
The court adopted four propositions as to the interpretation of EC instruments: ‘rules or principles of interpretation. A provision means what it means, in the context in which it appears and, as in domestic law, resort may be had to a variety of different indicators in arriving at the true meaning of the provision in hand, and in different contexts different indicators will have different degrees of influence. There are no hard edged rigid rules.
ii) It is wrong to set up a teleological or purposive interpretation on the one hand and a literal interpretation on the other as if they were mutually exclusive alternatives. It is not as simple as that. A literal interpretation of legislative wording may be required in order to achieve the legislative purpose. In that event a teleological approach would require a literal interpretation. A teleological interpretation does not necessarily mean an expansive interpretation. It simply means giving effect to the intended purpose of the legislative instrument, which may or may not involve simply giving its words their literal meaning.
iii) It is wrong to adopt a prescriptive approach to the meaning of the expression ‘restrictive interpretation’. It is not a mathematical formula to be applied with precision. As Lord Steyn has said extrajudicially, interpretation is an art and not a science. When applying a restrictive interpretation, the court must take account of the ordinary meaning of the words used but it must do so in the relevant legislative context and must therefore have regard to the overall purpose of the Directive, and in particular to the specific interests that the relevant exception (here article 4(2) of the Directive (and therefore paragraph 6(2)(b) of the 1999 Regulations)) is designed to protect. Such an exercise might involve reading words in, cutting them out or taking any other step necessary to produce a result which reflects the relevant purpose in the circumstances. It follows that it is wrong to suggest that the phrase ‘restrictive interpretation’ must involve simply giving the words their ordinary meaning. It is not as simple as that. As ever, all depends upon the circumstances.
iv) It does not help to say that a restrictive interpretation means giving words their ordinary or usual meaning because legislative wording inevitably has a certain elasticity of meaning depending upon its context. Put another way, the natural meaning of the words will itself depend upon the purpose for which and the context in which they are being used.’

Sir Anthony Clarke MR
[2009] EWCA Civ 116, Times 03-Mar-2009, [2009] 2 CMLR 30, [2009] 1 All ER (Comm) 1097, [2009] 2 WLR 1286
Unfair Terms in Consumer Contracts Regulations 1999 6(2)(b), Council Directive 93/13/EEC on unfair terms in consumer contracts, EC Treaty 95(3)
England and Wales
See AlsoOffice of Fair Trading v Abbey National Plc and others ComC 21-Jan-2009
. .
CitedCommission v Spain ECJ 18-Jan-2001
ECJ Judgment – Failure of a Member State to fulfil its obligations – Article 12(3)(a) of the Sixth VAT Directive – Application of a reduced rate to motorway tolls . .
CitedDirector General of Fair Trading v First National Bank HL 25-Oct-2001
The House was asked whether a contractual provision for interest to run after judgment as well as before in a consumer credit contract led to an unfair relationship.
Held: The term was not covered by the Act, and was not unfair under the . .
CitedLondon Borough of Newham v Khatun, Zeb and Iqbal CA 24-Feb-2004
The council made offers of accommodation which were rejected as inappropriate by the proposed tenants.
Held: The council was given a responsibility to act reasonably. It was for them, not the court to make that assessment subject only to . .
See AlsoOffice of Fair Trading v Abbey National Plc and others ComC 8-Oct-2008
The director sought a further judgment as to whether charges imposed by banks on a customer taking an unauthorised overdraft, and otherwise were unlawful penalties. . .
Appeal fromOffice of Fair Trading v Abbey National Plc and seven Others ComC 24-Apr-2008
The Office sought a declaration that the respondent and other banks were subject to the provisions of the Regulations in their imposition of bank charges to customer accounts, and in particular as to the imposition of penalties or charges for the . .

Cited by:
Appeal fromOffice of Fair Trading (OFT) v Abbey National Plc and Others SC 25-Nov-2009
The banks appealed against a ruling that the OFT could investigate the fairness or otherwise of their systems for charging bank customers for non-agreed items as excessive relative to the services supplied. The banks said that regulation 6(2) could . .

Lists of cited by and citing cases may be incomplete.

Banking, Consumer, European

Updated: 01 November 2021; Ref: scu.304530