The parties entered into a hire purchase agreement in relation to the purchase of a car. The defendant sold the car on and when the claimant became aware of this, the parties agreed to an uplifting of the car on a voluntary surrender basis. The claimant issued a Notice of Default pursuant to s87(1) of the Consumer Credit Act (CCA) and notice of termination of the agreement, and then commenced proceedings for the sums outstanding. The issue was whether the defendant was entitled to the protection of the statutory cap under s100(1) of the CCA which imposes a limit on the liability of a debtor on termination of a hire purchase agreement. The claimant argued that as the defendant had not exercised her statutory right to terminate pursuant to s99 of the CCA, the right to a cap was lost when the agreement was properly terminated; and that it could pursue its remedy in contract for full damages for repudiatory breach (to which the s100(1) cap did not apply).

The court agreed. The statutory cap does not extend to circumstances other than those in which the customer has exercised the s99 right to terminate voluntarily, which then gives rise to the operation of s100(1). It had not been exercised here and the claimant was entitled to claim damages such as to put it in the position it would have been in had the contract been performed, i.e. the balance of the hire purchase price less the proceeds of sale.

This is only a first instance, unreported case, but nevertheless a very useful authority to argue that the s100 relief applies only if there is a prior voluntary termination.

First Response Finance Limited v Michelle Donnelly