This blog post is the first in a mini-series concerning the collapse of Thomas Cook. Max Archer explores one of the potential alternative targets for litigants, namely credit card companies.
Section 75 of the Consumer Credit Act 1974 reads as follows:
“If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.”
The effect of this section is to render a credit card provider jointly and severally liable with the supplier of a service. As such, where consumers had a contractual remedy against Thomas Cook, they have a like remedy under this provision against their credit card company. Clearly, this only applies to consumers who have in fact used a credit card to purchase a holiday or service from Thomas Cook. The only application for commercial parties is to direct potential claimants elsewhere.
The courts have made is clear that s. 75 applies to the supply of services overseas (Grove v Amex. Europe Limited, 28 April 2003 (Wandsworth County Court, HHJ Behar)) and to overseas transactions (Office of Fair Trading v Lloyds TSB Bank Plc & Ors  EWHC 2600 Comm). As to the latter, a claim brought against the credit card company under s. 75 may not be entirely straightforward with applicable law issues flowing from the fact that the contract was made overseas (see the Rome I Regulation for further detail).
The only remedy that can be sought under s. 75 is a contractual one; there can be no claim for negligence. This will apply to the vast majority of claims that would otherwise have been brought in contract against Thomas Cook under the Package Travel, etc. Regulations 1992 or 2018. The heads of loss that can be sought are identical to those that could have been pursued against the supplier (Thomas Cook) therefore there is no reason why damages for personal injury cannot be sought under this provision.
There is a question mark over whether a case that was brought under the Montreal Convention 1999 arising out of an accident that took place on a Thomas Cook airline will qualify as a ‘contractual claim’ for the purposes of s. 75. There are arguments in both directions that will not be set out here. Suffice it to say this point has not been tested in the higher courts as yet.
It must be remembered that, although s. 75 renders a creditor jointly and severally liable, they are not the same party as Thomas Cook. Thus, in ongoing cases where creditors are added to proceedings (see below) they are entitled to run their own defence as they wish. Further, they may not be liable for all of a claimant’s costs expended in pursuing Thomas Cook in ongoing proceedings.
The more straightforward claims are those in which proceedings have yet to be started. Claimants may initiate proceedings directly against the creditor.
Where proceedings are ongoing, CPR Part 19 governs the addition and substitution of parties. In this scenario, the appropriate procedure is likely to be addition rather than substitution, the latter applying where a party’s liability has passed to another. This is not the case in this scenario: the liability of a party like Thomas Cook does not pass to a creditor, the creditor is statutorily jointly and severally liable.
CPR r. 19.2 governs addition where the claim is brought within the primary limitation period whereas CPR r. 19.5 governs addition after the expiry of limitation. It should be noted that the court has the power to add a party after judgment has been given but not satisfied, see C Inc Plc v L  2 All ER (Comm) 446 and Prescott v Dunwoody  1 WLR 2343.
The procedure is to make an application promptly supported by evidence.