I have heard of two cases where this document has been produced in court and resulted in Paragon settling for reduced figures. I have the case notes from one of the cases which took place in Northampton County Court. The argument is that the letter was a variation to the Consumer Credit Agreement and if it was "consideration" (http://en.wikipedia.org/wiki/Consideration_under_English_law).
In this case Paragon had won judgement but then appealed for interest on top. Paragon dropped the appeal after this document was introduced and agreed to settle for the original amount.
"Paragon originally claimed over £18,107 but the district judge gave them judgment for £5,457 because that was what they had told us throughout was the balance, only asking for £18,107 when they issued proceedings. They (paragon) immediately asked for permission to appeal. The District Judge refused; they asked again at the appeal court.
After permission to appeal was given by the Court of Appeal they put forward a somewhat insulting offer to accept £18,107 in settlement and write off the interest and costs incurred in the meantime.
About one month before the scheduled Court of Appeal hearing date, they improved the offer to £5,457".
In the above case the argument against Paragon was the letter sent in February 2000 was consideration. As Paragon settled for the reduced figure the case for consideration wasn't tried, but it's interesting that Paragon backed down after the document was produced.
In the second case it was argued that the letter dated 15th February 2000 was a variation of the Consumer Credit Agreement and didn't comply with technical aspects of the 1974 Consumer Credit Act. Once again Paragon backed down.
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