The High Court has handed down its judgment in Breeze & Others v TSB Bank PLC [2024] EWHC 2427 (Ch), addressing three preliminary issues in a significant group litigation brought by former Northern Rock mortgage customers against TSB.
The claims arise from TSB’s acquisition of former Northern Rock mortgages, which it administers under its ‘Whistletree’ brand. The claimants allege that TSB applied an excessively high standard variable rate (SVR) to these mortgages, in breach of contract and statutory duty. They also seek relief under the Unfair Terms in Consumer Contract Regulations and sections 140A and 140B of the Consumer Credit Act 1974 (CCA 1974).
The judgment addressed three preliminary issues, in summary:
The Express Terms Issue: Whether TSB breached the express terms of the mortgage contracts by applying a different SVR to its Whistletree mortgages compared to other TSB mortgages.
The Implied Term Issue: Whether there was an implied term restricting TSB's discretion in setting or varying interest rates, and if so, its scope. Whether TSB breached any such term will be determined at a later stage.
The Consumer Credit Act Issue: Whether section 140A(5) of the CCA 1974 precludes certain claims for relief in respect of regulated mortgage contracts.
On the Express Terms Issue, the Court ruled in TSB’s favour. It held that the contractual terms did not require TSB to align the SVR applied to former Northern Rock mortgages with the SVR applied to TSB’s other mortgage products. The Court found that the “Whistletree SVR” applied by TSB was in substance a continuation of the original SVR operated by Northern Rock, rather than a new rate. This outcome disposes of the primary claim brought by the claimants.
The Implied Term Issue was resolved by agreement before trial.
TSB succeeded on the Consumer Credit Act Issue. The Court ruled that while the terms and conduct of a regulated mortgage contract as a related agreement can be taken into account when assessing whether a relationship is unfair under section 140A of the CCA 1974, a court cannot make orders for relief under section 140B of the Act directly affecting a regulated mortgage or quantified by reference to sums paid under a regulated mortgage. This ruling clarifies how mortgages and other consumer credit agreements will be regulated where they are entered into as linked transactions.
This judgment has significant implications for the ongoing litigation and other cases involving former Northern Rock mortgages, other transferred mortgage portfolios and linked credit agreements.
Sonia Tolaney KC and Tim Goldfarb appeared for TSB, together with James Duffy KC, instructed by Hogan Lovells International LLP.