Further to our coverage in January 2023 here, the UK Supreme Court has handed down its judgment in Smith & Burrell v Royal Bank of Scotland plc [2023] UKSC 34.

The full judgment is available here and here.

For a more in-depth case summary and analysis from the Barristers of our associated 25 Canada Square Chambers, please click here.

One of the key outcomes from the appeal is that the assessment of the fairness of a relationship between a creditor and a debtor must be carried out either (1) on the date of the hearing/trial, for ongoing relationships, or (2) based on the date that the parties' relationship ended, if this pre-dates the hearing/trial. It is necessary for the relationship to be unfair on the date of the fairness assessment itself (i.e. either on the date of trial if ongoing, or the date when it ended), and it is not enough for the relationship to have previously been unfair at an earlier point in time.

As to limitation, the usual 6-year time period in which a debtor may bring a claim predicated on an allegedly unfair relationship (s9 Limitation Act 1980) does not begin to run during the currency of the relationship, but only begins running once the relationship ends.

When assessing fairness, the Court must have regard to all matters it thinks relevant, including matters relating to the creditor and matters relating to the debtor - s140A(2) Consumer Credit Act 1974. This is a fact-sensitive exercise. Delays by the debtor in taking action, a lack of any complaint during the relationship, or remedial steps taken by the creditor during the relationship, are factors which will often have a bearing on whether the Court determines the relationship to be unfair when it carries out the assessment.

A determination of unfairness does not invariably lead to a remedy under s140B, but merely engages the Court's discretion under that provision - at [57]. Both Lord Leggatt and Lord Hodge stated that it would be "inconceivable" (at [57] and [89] respectively) that a Court would think it just to make an order under s140B in circumstances where a "debtor sits on [their] hands in knowledge of the relevant facts" (at [89]).

The UKSC press summary of the judgment can be found here.