Zachariah Arabeh Secures Dismissal of Undisclosed Commission Claim on Grounds of Undue Delay

Zachariah Arabeh, instructed by Kirsty Hill of Capital One (Europe) plc, recently achieved a significant outcome at trial, successfully defending a claim brought against the credit provider. Relying on the defence of “undue delay,”  Zachariah secured the dismissal of an undisclosed commission claim arising in the context of Payment Protection Insurance (PPI).

Background

The case concerned allegations of an unfair relationship under Section 140A of the Consumer Credit Act 1974, with the Claimant contending that undisclosed commissions rendered the relationship unfair.

The Claimant had entered into a regulated credit agreement in 2001, during which he opted for a PPI policy. While the PPI policy was cancelled in 2004, the credit agreement itself remained active and was still in place at the time of trial in September 2024.

The recent Supreme Court decision in Smith and Another v Royal Bank of Scotland plc [2023] UKSC 34 clarified that the limitation period for such claims begins when the credit agreement ends, not when the PPI policy is terminated. Consequently, the Defendant was unable to rely on a limitation defence.

The Claimant, who had not pursued redress through the Financial Conduct Authority (FCA) scheme, appeared confident of success based on the potential application of the FCA’s methodology for damages. However, the Defendant had also pleaded “undue delay” as an alternative defence, a strategy that proved decisive at trial.

The Defence of Undue Delay

The Supreme Court in Smith (at paragraphs 56, 57, and 89) recognised undue delay as a significant factor when assessing claims of unfairness. The Court observed that awarding damages to a claimant who had failed to raise a complaint for an extended period without an extraordinary explanation would be “inconceivable.” Prolonged inaction by the debtor is likely to weigh heavily against the fairness of the relationship at the time of its termination.

In this case, the Claimant did not attend the trial for cross-examination. His witness statement was criticised for relying on generic phrases disconnected from the documentary evidence and for failing to address the undue delay defence adequately. The Claimant provided no explanation as to when he became aware of the PPI mis-selling issues or why he waited 19 years to bring his claim after cancelling the PPI policy in 2004.

The trial judge concluded that the Claimant’s failure to act for nearly two decades was decisive. The absence of extraordinary circumstances explaining the delay led the Court to find that awarding damages would be unjust, as contemplated in Smith.

Judgment

The Court dismissed the claim on the grounds of undue delay. While the Judge acknowledged that the undisclosed commissions rendered the relationship unfair between 2001 and 2004, the Claimant’s inaction for 19 years without justification made it “inconceivable” for the Court to grant the relief sought.

No damages or redress were awarded, and the claim was dismissed in its entirety.

Conclusion

This case highlights the potential effectiveness of undue delay as a defence in PPI-related litigation, particularly in scenarios involving bulk claims supported by templated witness statements. Where limitation arguments are unavailable, a well-constructed undue delay defence can prove decisive, particularly when claimants fail to attend trial or offer a compelling explanation for lengthy delays.

Zachariah’s success underscores his expertise in navigating complex consumer credit disputes and delivering effective representation for major financial institutions.