His Honour Judge Waksman has delivered another judgment in favour of lenders. The claims all related to the interest rates stipulated on a regulated agreement relating to credit cards. The central allegation had been raised in at least 100 cases brought in the Altrincham County Court and it was also believed that similar cases had been brought in other county courts. Five test cases were chosen.

The claimants alleged that the APR stated in the agreement should be regarded as the primary figure and the monthly interest rate should be calculated from and should correspond (as closely as possible) to the APR. They produced an expert report from a mathematician and computer expert who concluded that the APR rates on the monthly cash advance balance rate were incorrectly stated.

A regulated agreement is not properly executed unless the agreement contains all the prescribed terms. If improperly executed, it is only enforceable by an order of the court. The court cannot grant such an order in respect of agreements signed before 6 April 2007 and so those agreements which did not contain all of the prescribed terms are irredeemably unenforceable. The claimants alleged that the APR was misstated and as a consequence the agreements were unenforceable.

The Judge explained that there is a very clear difference between the nature and function of the stated monthly (or annual) rate and the APR. The stated monthly or annual rate is (on its face) a contractual term. The APR is designed to provide information to consumers and is arrived at by a complex formula designed to include not only interest rates but also other charges. The APR is not a prescribed term. Merely because the APR is included does not make it a prescribed term of the agreement. The APR is not the driver of the figures and in any event, if it were, it would be unworkable as the APR figure only needs to be stated at the inception of the agreement.

Accordingly the claims that the agreements were irredeemably unenforceable because of an alleged mismatch between the APR and the stated rate of interest were struck out.

This case involved calculating the interest rates retrospectively, which as the Judge pointed out had "a surreal quality to it". In the light of the series of cases which have resulted in a positive outcome for lenders, this is yet another nail in the coffin for those who seek to use the courts to bring consumer credit related claims on a very tentative and speculative basis.

Sternlight v Barclays Bank Plc and others [2010] EWHC 1865

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