Article by Katie Wilkinson

The Supreme Court has unanimously allowed the appeals in Smith and another v Royal Bank of Scotland [2023] UKSC 34.

The appeals followed the Court of Appeal’s decision in Smith v Royal Bank of Scotland plc [2021] EWCA Civ 1832.

The appeals focussed on the question of whether claims brought pursuant to s.140A of the Consumer Credit Act 1974 (‘CCA’), commonly known as the ‘unfair relationship’ provisions,  to remedy unfairness arising from a credit relationship, were brought in time.

The underlying claims sought a declaration of unfairness, together with a remedy under s.140B of the CCA in relation to undisclosed commission for payment protection insurance policies (‘PPI’). The policies of PPI were taken out by customers of the Royal Bank of Scotland (‘RBS’) at the same time as credit agreements were entered into.

Both Smith and Burrell brought separate claims in the County Court in 2019 seeking an order that RBS repay all the money paid by them for PPI (less the redress already paid), plus interest. The claims succeeded and the decisions were both upheld on appeal by the County Court Judge.

On second appeals, the Court of Appeal ruled in favour of RBS, holding that in each case the relevant time limit for bringing a claim had expired before the claim was brought.

Both Smith and Burrell appealed to the Supreme Court.

The Supreme Court has held that both claims were brought before the relevant time limit expired.  The orders made in the County Court in each case were restored.

The Judgment provides that the 6-year time limit to bring a claim, as provided for by s.9 Limitation Act 1980, does not start to run until the credit relationship ends.  This decision overturns the view of the Court of Appeal, whose decision held that time starts to run at the point the PPI policy (and any associated ongoing economic effect) comes to an end.

The Supreme Court noted that the decision did not unduly expose RBS and other creditors to stale claims given that the court retains a discretion as to what, if any, remedy to grant.