National Westminster Bank Plc v Story and Another: CA 7 May 1999

The court asked whether a series of smaller loans were governed by the 1974 Act. Three facilities had been provided under one loan agreement. 2 loans were held to be for unrestricted-use credit.
Held: Three credit agreements separately signed, but part and parcel of the same transaction counted as one aggregate transaction to determine whether or not any one of them was an agreement regulated under the Consumer Credit Act.
Auld LJ gave obiter guidance at on the application of section 18. The meaning of ‘part’ was not limited to a facility whose terms differed from another facility under the same agreement, but could include a separate facility under an agreement where the debtors’ use, or non-use, of it did not affect the contractual nature of the agreement as a whole, in particular, his entitlement to use those other facilities. ‘The main purpose of section 18 is to prevent frustration of the Act’s protection to borrowers by the artificial combination of two or more agreements in one so as to take the total credit negotiated above the limit qualifying for protection.’ and ‘Whatever the uncertainties as to the meanings of ‘part’ and ‘category’ of agreement under section 18, they do not require resolution in this case. My inclination, without formally deciding the matter, is that the word ‘part’ in this context includes, but is not restricted to, a facility that is different as to some of its terms from another facility granted under the same agreement or one that can stand on its own as a separate contract or bargain. However, I believe that it would accord with the ordinary and natural use of the word for it to have a broader application so as to include, as here, a separate facility provided with others under an agreement where, even if the facility as a contractual entitlement does not stand on its own, the debtor’s use, or non-use, of it does not affect the contractual nature of the agreement as a whole, in particular, his entitlement to use those other facilities.’


Auld LJ, Lord Woolf MR and Robert Walker LJ


Times 14-May-1999, Gazette 19-May-1999, [1999] EWCA Civ 1361, [1999] CCLR 70




Consumer Credit Act 1974 18


England and Wales

Cited by:

CitedHeath v Southern Pacific Mortgage Ltd ChD 29-Jan-2009
The appellant challenged a mortgagee’s possession order saying that the loan agreements sought to be enforced were invalid and the charges unenforceable. The loan had been in two parts. She said that as a multi-part agreement it fell within section . .
CitedSouthern Pacific Mortgage Ltd v Heath CA 5-Nov-2009
The court considered the effect of an agreement within the 1974 Act falling into more than one category of agreement. Part was used to be used for the repayment of an existing mortgage (restricted use credit), and part was unrestricted. The question . .
Lists of cited by and citing cases may be incomplete.

Banking, Consumer

Updated: 19 May 2022; Ref: scu.84222