Interest after judgment

Director General of Fair Trading v First National Bank Plc (H of L TLR 1 November)

Unanimously reversing the decision of the Court of Appeal the Judicial Committee of the House of Lords upheld a term in a bank’s standard form of regulated credit agreement, that interest should be chargeable until payment of the borrower s outstanding balance ‘after as well as before any judgment, such obligation to be independent of and not to merge with the judgment’, holding that this was a default condition and not one which governed the adequacy of the interest earned by the bank as remuneration for its loan. Accordingly, the term fell outside regulation 3(2)(b) of the Unfair Terms in Consumer Contracts Regulations 1994 and had therefore to comply with the requirement of fairness provided by regulation 4. The term, in the context of the whole contract when it was made, was not unfair within the meaning of regulation 4(1) and was not rendered unfair by the statutory scheme provided by the Consumer Credit Act 1974 and the County Courts (Interest on Judgment Debts) Order 1991.