Paragon Personal Finance Limited and broker LL Processing (UK) Limited have won a potentially landmark court case against a borrower over PPI claims; setting a precedent for the industry and adding yet another nail in the PPI mis-selling coffin.
On 4 October 2012, Recorder Yip QC ruled over the Manchester County Court case in what was one of the first judgments in PPI litigation since the Harrison v Black Horse appeal was withdrawn from the Supreme Court earlier this year. In Plevin v Paragon Personal Finance Limited & LL Processing (UK) Limited (in Liquidation), the Court was faced with a claim which had already been subject to four amendments with another proposed at the start of the trial.
In 2006, Mrs Plevin took out a £34,000 secured loan to be paid back over ten years, to fund some home improvements and consolidate her existing debt. Via the broker LL Processing (UK) Limited, she took the loan, plus a five year PPI policy for £5,780, out with Paragon Personal Finance. After moving house in 2007, Mrs Plevin took out a further, smaller loan with Paragon without PPI.
Two years later Mrs Plevin took legal action against both the broker and the lender over a number of grounds including the claim that the broker had said or implied that the PPI was compulsory when in fact it wasn’t and that the Broker and insurer would receive commission which also created an ‘unwholesome incentive’ for the Broker to sell PPI.
Fiona Hayles, Senior Associate at law firm SGH Martineau, who represented Paragon, said: “The problem faced by Mrs Plevin in maintaining these arguments was that following the withdrawal of the appeal to the Supreme Court in Harrison v Black Horse, the robust decision of the Court of Appeal remains good and binding law.
“Recorder Yip QC noted that whilst Mrs Plevin had suffered ‘buyer’s remorse’ in relation to her decision to take out PPI following the Harrison decision, a seller is not obliged to warn a buyer of whether his product is expensive or why he charges the prices he does. The Court found that there could be no unfair relationship between Mrs Plevin and Paragon and also decided against Mrs Plevin’s claim under section .18 of the Consumer Credit Act that the PPI agreement was incorrectly executed and therefore unenforceable.”
Mrs Plevin’s legal representatives, Miller Gardner, ran up costs amounting to £320,000 by the time of trial, against a maximum claim value of some £5,000, yet failed to get to the bottom of the factual case. Paragon had made a without prejudice offer to Mrs Plevin back in 2010 on a commercial basis simply to see an end of the litigation, which was rejected by Miller Gardner.
Fiona continued: “Recorder Yip QC held that as a result, and given her ‘real concerns’ over Miller Gardner’s conduct, it would be appropriate to order that Mrs Plevin pay Paragon’s costs on the indemnity basis in relation to the entirety of the action. This is the strongest order that a Court can make and is illustrative of the displeasure with which Miller Gardner’s conduct was regarded. It was clear from the amount in question that the litigation had been run only to benefit Mrs Plevin’s solicitors and not to achieve the best result for her.
“Given the findings by the Court of Appeal in Harrison and Recorder Yip QC in Plevin, claimant solicitors now have little chance of successfully continuing with claims in relation to PPI mis-selling. Further, the Courts are now very much alive to the fact that such claims cannot be regarded as being in borrowers’ best interests. The industry that has grown up around PPI should beware.”