First County Trust Ltd v. Loxley [2004] UKHL 47
Court: House of Lords
Facts: The defendant pawnbroker (D) lent the claimant, Wilson (C), money secured against her vehicle, under an agreement regulated by the Consumer Credit Act 1974. This agreement was made in 1999, prior to the Human Rights Act 1998 (HRA) coming into force in 2000. Section 127(3) of the Consumer Credit Act stated that if not all terms of the agreement were specified, the court could not enforce it. When C failed to repay, she claimed the agreement was unenforceable due to the absence of the specified amount of credit. The county court judge found the agreement enforceable. C appealed to the Court of Appeal, which ruled the agreement unenforceable and issued a declaration of incompatibility under section 4 of the HRA, finding the bar on enforcement violated Articles 6(1) and 1 of the First Protocol of the ECHR. D then appealed to the House of Lords.
Issue: Did the Court of Appeal have jurisdiction to issue a declaration of incompatibility regarding the Consumer Credit Act, and could section 3 of the HRA apply retrospectively to agreements made before the HRA came into force?
Held: The House of Lords allowed the appeal, ruling that the Court of Appeal lacked jurisdiction to make a section 4 declaration of incompatibility.
Key Judicial Statement: Lord Nicholls of Birkenhead stated, “The court’s jurisdiction to make a declaration of incompatibility under s4 presupposes that, despite application of the principle of interpretation stated in s3, the legislation is non-compliant.” He emphasized that interpretation under s3 is a preliminary step before considering a declaration of incompatibility.
💡Leveluplaw: clarified the relationship between sections 3 and 4 of the Human Rights Act, asserting the presumption against retrospective application of legislation. It established that existing rights and obligations under the Consumer Credit Act 1974 could not be altered retroactively by the HRA, thus protecting the integrity of agreements made prior to the Act's enactment. The decision reinforced the principle that legislative changes should not undermine vested interests established before such changes.