MBNA - say defaulted me but send a default notice???

[willtheywontthey]

Can anybody please explain what on earth MBNA are up to. Their recent letter states they have put a default on the account (had no actual official default notice at all until this)....?

 

They say a stop has been put on card and account defaulted.

 

Letter mentions that in order to remedy this I should pay all the debt and in full. If I do not do this the account will be closed and credit agreement terminated. They will not send me any more statements (!?) - oh love the bit about 'sort the matter out' ...

 

I find it strange that they have defaulted me without sending the threatening default notice stating I have x amount of days (14+ usually?). Am I right in thinking they have done everything the wrong way round?? The date they give to pay is within 14+ days so not an issue.

 

Would appreciate any assistance on this please.

Some background ...

 

I have sent a multitude of letters to them stating their cca response is unfulfilled because it is illegible (also 2 pages missing as it says page 1 of/4 and 3/4 or similar on the so-called agreement). Their last response was to send a reduced copy size A5 cca which made it more illegible and to say they could read it and nothing was missing!

 

Will post the recent letter for now as that's my main issue at moment not the cca. Will add that later if needed?

 

[vint1954]

They seem to be sending a lot of these out. Not sure why.

 

I bet that the letter date is 7th September with rectification date as 24th September.

 

Short answer is that they have messed up. Regardless of what their terms and conditions say, the act says that they must notify you of the breach in a default notice and the arrears that need to be paid and by when. This must give 14 clear days to rectify the breach from the date of service. Service is deemed by post to be 2 days after posting for first class, 4 days for second. I beleive that these are sent second class. Keep your envelope.

[DonkeyB]

Correct me if I'm wrong Vint, but doesn't asking for the WHOLE amount mean they have effectively terminated the agreement? Surely a DN should only request remedy of arrears to bring the account up to date, as you say. This is a wholly improper and wrongly executed default notice, I think. And the language is that of an office junior...

 

Maybe MBNA have hired the same numpty to draft their DNs as Halifax are using...

[Pinky69]

WAIT for the letter telling you the account is terminated then tell them to Foxtrot Oscar on the grounds of an unlawful DN.

[vint1954]

Correct me if I'm wrong Vint, but doesn't asking for the WHOLE amount mean they have effectively terminated the agreement? Surely a DN should only request remedy of arrears to bring the account up to date, as you say. This is a wholly improper and wrongly executed default notice, I think. And the language is that of an office junior...

 

Maybe MBNA have hired the same numpty to draft their DNs as Halifax are using...

Hi DB,

 

Yes, requesting the whole ballance is a form of termination. This usually happens when a DN is issued and the ballance is subsequently demanded in full. It will need some thought as to the consequences of demanding the ballance in full ( terminating ) within the DN itself.

 

It may be that this just renders the DN faulty and an additional act of termination is required. I realy am not sure at the moment.

 

As you say, the DN is only there to rectify the arrears within a prescribed time frame, 14 clear days from service.

 

In the case of service, if the DN is sent Royal mail first class, it is 2 days. If sent Royal mail second class, it is 4 days. UK mail is classed as second class, 4 days, so if it is sent on the 7th sept, service will be deemed on the 11th sept, which it was , plus 14 clear days to rectify will mean a rectification date of the 25th sept. This means that the DN requesting rectification in full by the 24th sept, is doubly faulty, if indeed it can be.

 

Below are x20's conciderable thoughts on termination.

 

My fellow Caggers, back to the general issue ..

 

May be it was my doing or we've just hung on to this word 'termination' like Rotweillers. The thing is, at least as I see it is, that where a creditor seeks early repayment or the return of goods following service of an ineffective DN, he is by his words and conduct expressing in clear terms that he is no longer willing to perform the essential obligations he promised to provide under the credit agreement. True, these words and conduct ride on the back of the debtor's failure to perform the debtor's essential obligations. But in this event the creditor has only to follow the procedure laid out in the Act and Regulations. And the Act says unless and until he has met the requirements of the Act and the Regulations, he acquires no such entitlement. Accordingly, to withdraw from the debtor the right to pay sums due by instalments or withdraw the right to continue with possession of the goods is to withdraw in breach of the statutory code which regulates the agreement.

 

The withdrawal of the debtor's rights may in one person's parlance be the same as the creditor's termination of the agreement. Just like 'default' in the words of one person may amount to 'breach' in the words of another. Or 'repudiatory breach' in the language of lawyer A is 'renunciation' in the language of lawyer B. Let's say though, for the purpose of the stream of thinking which follows, that strictly and legally speaking, withdrawal of these rights in default (or breach) isn't a termination of the agreement and that for termination strictly so called to have occured, the creditor miut have served a notice of termination. Does that mean therefore that the creditor's withdrawal and demand for early payment and/or return of goods is something the court can waive? Something the debtor can be expected to have understood was a mistake and unintended? That it is of no consequence?

 

I've got Chitty on Contracts General Principles (26th Edition) (1991). A bit out of date but good enough on General Principles I would have thought. And I'd thought I'd open it. Always a good idea when examining the contractual relationship of parties. Interestingly, 'termination' does not have an entry of its own in the umpteen page index at the back. It says in relation to Renunciation (and if you look up Repudiatory Breach it refers to to the same page number) that:

A renunciation of a contract occurs when one party by words or conduct evinces an intention not to perform, or expressly declares that he is or will be unable to perform, his obligastions under the contract in some essential respect. An absolute refusal by one party to perform his side of the contract will entitle the other party to treat himself as discharged, as will also a clear and unambiguous assertion by one party that he will be unable to perform when the time for performance should arrive. Short of such an express refusal or declaration however, the test is to ascertain whether the action or actions of the party in default are such as to lead a reasonable person to conclude that he no longer intends to be bound by its provisions. The renunciation is then evidenced by conduct. Also, the party in default 'may intend in fact to fulfil (the contract) but may be determined to do so only in a manner substantially inconsistent with his obligations' [Federal Commerce & Navigation Co Limited v Molena Alpha Inc (1979)] or may refuse to perform the contract unless the other party complies with certain conditions not required by its terms. In such a case, there is little difficulty in holding that the contract has been renounced.

 

If one party evinces an intention not to perform or declares his inability to perform some but not all of his obligations under the contract, then the right of the other party to treat himself as discharged depends upon whether the non-performance of those obligations will amount to a breach of a condition of the contract or deprive him of substantially the whole benefit which it was the intention of the parties that he should obtain from the obligations of the parties under the contract then remaining unperformed.

 

The renunciation must be made quite plain. In particular where there is a genuine dispute as to the construction of a contract, the courts may be unwilling to hold that an expression of intentino by one party to carry out the contract only in accordance with his own erroneous interpretation of it amounts to a repudiation and the same is truew of a genuine mistake of fact or law.

The demanding of early payment is to my way of thinking the immediate withdrawal of consent to all the remaining credit provided for under the agreement. Further, that it substantially deprives the debtor of the prime benefit he was to derive under it. Such a demand constitutes a breach of the regulated agreement save where it is demanded in compliance with the Act. If the demanding of such things is not tantamount to the creditor terminating the agreement, it is, nonetheless in my opinion, the creditor's renunciation of it. in consequence and in my opinion, the debtor may fairly regard himself as discharged from the agreement.

 

Chitty has this to say:

 

Consequences of Discharge - Effect on Contract

It has become usual to speak of the exercise by one party to treat himself as discharged as a 'recission' of the contract but as Lord Porter pointed out in Heymans v Darwin limited (1942):

'To say that the contract is rescinded or has come to an end or ceased to exist may in individual cases convey the truth with sufficient accuracy, but the fuller expresion that ther injured party is thereby absolved from future performance of his obligations under the contract is a more exact description of the position. Strictly speaking, to say that on acceptance of the renunciation of a contract the contract is rescinded is incorrect.'

This statement was unanimously approved by The House of Lords in Johnson v Agnew (1980) where Lord Wilberforce emphasised that this so-called 'recission' is quite different from recission ab initio as may arise for example in cases of mistake, fraud or lack of consent. It has also become usual to speak of the contract as having been 'terminated' or 'discharged' by the breach. Again however, these expressions may be somewhat misleading for they might suggest that the contract ceases forv all purposes to exist in that event. Such an approach was indeed adopted by the Court of Appeal in Harbutt's Plastercine Limited v Wayne Tank & Pymp Co (1970) so as to prevent the party in default from relying on an expemtion clause inserted in a contract which had been 'terminated' by breach. But this case was overruled by the House of Lords in Photo Production limited v Securicor Transport limited (1980). The true position was there stated to be, where the innocent party elects to terminate the contrsct, ie to put an end to all primary obligations of both parties remaining unperformed - that (per Lord Diplock) '(a) there is substituted by implication of law for the primary obligations of the party in default which remain unperformed a secondary obligation to pay money compensation to the other party for the loss sustained by him in consequence of their non-performance in the future and (b) the unperformed primary obligations of that other party are discharged.'

Given Diplock's statement of the position, may be to describe the agreement as 'terminated' following the events we are describing is, to adopt the words of Lord Porter, '.. to convey the truth with sufficient accuracy.'

 

FURTER.

I am yet to be persuaded that in the context of a regulated consumer credit agreement and the receipt of an express notice or activity on the part of the creditor consistent with termination, that the agreement does not terminate unless and until the debtor signifies by word or deed that he accepts termination. The damned notice of termination says what it says.

 

For sure in those cases where the termination amounts to the anticipatory breach of the agreement by one of the parties to that agreement the law says the innocent party should elect either to accept the termination or inform the terminating party that he requires them to perform their obligations owing under the agreement. But we're not concerned with an anticipatory breach by the creditor. It's not as if the creditor having agreed to give credit has then decided not to loan after all. What the creditor is doing is calling in the loan he has already made ahead of the time when it would ordinarily have been repaid.

 

But in a regulated consumer credit agreement, what in reality can the court genuinely expect the innocent, ordinary and unsophisticated debtor to a consumer credit agreement, who is strapped for cash, do in response to the demands of the creditor? Write a letter saying 'I accept your repudiatory breach of contract'?. Of course not. Well I say of course not. That is a ludicrous expectation to hold. Was the Court of Appeal ever concerned to ascertain in Woodchester v Swayne & Co that Swayne had accepted Woodchester's termination on the back of their ineffective DN? Mais non. Swayne & Co had done nothing. Swayne & Co were a firm of solicitors in Cardiff for crissake. Yet they still were treated to the benefits of the Act as one intended for the protection of consumers. Swayne were, according to claue 9.1 of the terms of the agreement between Woodchester and Swayne, in repudiatory breach of contract, entitling Woodchester to immediately terminate the agreement. But all the same, Kennedy LJ held that the provisions of section 87 dictated what Woodchester were required to do in order for Woodchester to become entitled to claim early payment and demand the return of the photocopier let on hire under the agreement. This was regardless of what the agreement said.

 

Indeed in the context of activity, if Swayne & Co had paid some money to Woodchester they would have done themselves a favour because those payments would have been applied to the credit of the arrears.

 

I appreciate that counsel for banks are currently advancing that the absence of some clear acceptance on the part of the debtor operates to negate the meaning and intent of the creditor's express termination. The latest clever arguments seem to be that a DN is not required at all where the agreement has no fixed duration. But that's counsel pushing at the boundaries and thinking out the box in a novel way. All good lawyers do that. They invent and shape their arguments to distinguish their case from those which suggest they're on a loser so as to suit the requirements of their client. They have no idea as they're inventing and shaping that the argument they've conjured will succeed. But they sigh with relief when they appreciate their opponent is a LiP.

 

I do not buy in to the notion that unless the debtor is active or inactive in a way somewhat different to the way he was active or inactive prior to the termination, that the agreement has endured despite the delivery of an express notice of termination, or despite activity on the part of the creditor which is in keeping with the creditor having terminated the agreement. Remember this : when Woodchester v Swayne was first decided, before it got to the Court of Appeal, Assistant Recorder Higginbottom found for the creditor on the basis that

 

"A default notice served under Section 87 and Section 88 is not rendered defective merely because the action indicated as required to be taken to remedy the breach is in fact over and above the action necessary to remedy that breach."

 

The Assistant Recorder did not add 'and because the debtor had failed to serve a notice of acceptance of termination or had conducted itself in a way different to the way it had conducted itself before termination or before the creditor behaved as if the creditor had terminated.'

 

Kennedy regarded the Assistant Recorder's judgment 'as a model of clarity'. But he still found the decision was wrong. He held quite the reverse to the Assistant Recorder. He held the DN was rendered defective because the action indicated as required to be taken to remedy the breach was in fact over and above the action necessary to remedy that breach. He did not qualify that view by saying it was reached owing to the activity or inactivity of the debtor or that his view would have been different depending on what activity or inactivity there may have been on the part of Swayne & Co. As we know, because Swayne got hit with a judgment for the actual arrears, Swayne did nothing.

 

Woodchester v Swayne is still good law. Swayne & Co did the right thing. They were well placed to do the right thing. They were a firm of lawyers. The right thing they did was to appeal the decision. The result speaks for itself.

 

x20

[gezwee]

Subbing

[willtheywontthey]

Thanks Vint... the legal side just confuses the hell out of me but your comments initially is food for thought and would appreciate anybody's feedback on main issues:

 

1. Does asking for full payment within a DN terminate agreement or not and if not is the DN then invalid?

 

2. If they now terminate agreement is that termination valid or not and on which basis?

 

3. Are they allowed to put a default without a Default notice? (if so what's the use of a DN?)

 

4. Is this letter a Default Notice???

[Undercover-Elsa]

Hi Willtheywontthey,

Weird one this, they seem totally unaware or unconcerned about the correct procedure.

As it's headed Default Notice served under Section 87(1) of The Consumer Credit Act 1974 it's trying very hard to be a default notice, but needs to try much harder!

By law, they cannot terminate the agreement OR DEMAND THE FULL AMOUNT OWING UNTIL they have issued a compliant Default Notice giving you 14 clear days to rectify the breach. So, as this mess of a Default Notice is asking for the full amount before the due date , unless they actually sent you a previous, compliant Default Notice, it is invalid.

 

REF the Consumer Credit Act:

87 Need for default notice

(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default

notice”) is necessary before the creditor or owner can become entitled, by reason of any

breach by the debtor or hirer of a regulated agreement,—

(a) to terminate the agreement, or

(b) to demand earlier payment of any sum, or

© to recover possession of any goods or land, or

(d) to treat any right conferred on the debtor or hirer by the agreement as

terminated, restricted or deferred, or

(e) to enforce any security.

 

 

If they now terminate, as much discussed on here, they unlawfully rescind the agreement and are in repudiatory breach of contract.

 

Elsa x

 

[willtheywontthey]

thanks... they have sent a few letters 'asking' for payment and threatening a default notice but no actual default notice.. unelss of course they blame the post? I will probably SAR them again later on to make sure. I think they might just be fed up with me consistently asking them for a 'legible' agreement and the remaining 2 pages (illegible CCA says page 1/4 and 3/4 so 2 pages missing)....

 

still it's one of the weirder default notices / letters I've had. Surely they don't mess up DNotices nowadays still?

[Undercover-Elsa]

Thankfully, they do!

[blueotter]

I've also received one of these default notices dated 7th sept,there seems to be an awful lot of us.

The cheeky mbna sods sent it out the same day as they sent my cca which i'd asked fro back in june.

I can't abide the company ,they seem to ride roughshod through all known consumer credit laws in this country with willfull contempt and are completely ignorant of consumer rights.

 

I'm worried about a court appearance but i have so much ammunition to throw at them.

[vint1954]

thanks... they have sent a few letters 'asking' for payment and threatening a default notice but no actual default notice.. unelss of course they blame the post? I will probably SAR them again later on to make sure. I think they might just be fed up with me consistently asking them for a 'legible' agreement and the remaining 2 pages (illegible CCA says page 1/4 and 3/4 so 2 pages missing)....

 

still it's one of the weirder default notices / letters I've had. Surely they don't mess up DNotices nowadays still?

The problem is they think they are right. Thats what you get for £8k a year. I suspect that the people working there are fed up with it and don't care.

 

I have responded to a lot of threads where theis mess has been issued. I have had mine as well.

 

I am sure that the senior managers must know that they are in a stew with agreements. Trouble is, if they admit it, what will that do to their market value. If they can keep it quiet as possible, then they hope that it will not trouble their investors.

 

I am sure that the just go through the motions. Some pay, fewer argue the toss. The latter get stuck in the process, then written off against tax and sold on to more chancers and around it goes again, right it off against tax, sell it on to lower life in the pond.

 

It realy should be exposed in the press, if any are intersted.

[angry cat]

I think that you will find that, the first default notice is sent with a Remedy in order to rectify the breach; pay the arrears.

 

Then, often a further DN is sent, requesting payment of the outstanding balance.

 

AC

[vint1954]

This is the first DN that I have received from MBNA. Thought that they had to terminate to claim the full ballance.

 

REF the Consumer Credit Act:

87 Need for default notice

(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default

notice”) is necessary before the creditor or owner can become entitled, by reason of any

breach by the debtor or hirer of a regulated agreement,—

(a) to terminate the agreement, or

(b) to demand earlier payment of any sum, or

© to recover possession of any goods or land, or

(d) to treat any right conferred on the debtor or hirer by the agreement as

terminated, restricted or deferred, or

(e) to enforce any security.

 

[angry cat]

A Default Notice is necessary if the lender is to terminate the agreement. However, MBNA do not always take the steps to terminate the agreement;

 

Note: (b) to demand earlier payment of any sum.

 

As previously stated, a DN will request payment of arrears, in order to Remedy a breach of the agreement;

 

if the Remedy is not made, then often a further DN will be issued demanding full payment of the outstanding balance in accordance with section 88, before terminating and enforcing.

 

The above can also occur, when an arrangement has been entered into.

 

AC

[angry cat]

Please note that, the fact that you are not able to draw down on the facility does not amount to a termination requiring the service of a DN (see section 87(2) of the Act).

 

AC

[cadwallader]

I also had one of the 7 September MBNA default notices and today received a letter dated 16 Sept informing me that the account has been sold to Direct Legal. Has anyone else received a similar letter following the 7 Sept DN?

 

C

[vint1954]

I also had one of the 7 September MBNA default notices and today received a letter dated 16 Sept informing me that the account has been sold to Direct Legal. Has anyone else received a similar letter following the 7 Sept DN?

 

C

They should not sell the debt on until after the rectify by date in the DN.

[vint1954]

A Default Notice is necessary if the lender is to terminate the agreement. However, MBNA do not always take the steps to terminate the agreement;

 

Note: (b) to demand earlier payment of any sum.

 

As previously stated, a DN will request payment of arrears, in order to Remedy a breach of the agreement;

 

if the Remedy is not made, then often a further DN will be issued demanding full payment of the outstanding balance in accordance with section 88, before terminating and enforcing.

 

The problem MBNA have is that they do not issue the first DN. Just go directly to plan b, but under s87.

 

The above can also occur, when an arrangement has been entered into.

 

AC

Vint

[griffin036]

I also had one of the 7 September MBNA default notices and today received a letter dated 16 Sept informing me that the account has been sold to Direct Legal. Has anyone else received a similar letter following the 7 Sept DN?

 

C

 

Just wondering on what day you recieved this d/n?

[vint1954]

Just wondering on what day you recieved this d/n?

They sent these out on the 7th by UK mail. This is classed as 4 days or second class delivery, so it will have been received on the 11th or 12th wont it.

Edited September 20, 2009 by vint1954

[teaboy2]

hi everyone i think you should all have a look at my thread here i have the same problem with MBNA, but mine is at a more advanced stage to what the rest of the posts on here are. So you can all see what you will be up against, which to be honest isnt much to worry about.

[gezwee]

Meant to ask....... did anyone elses dated the 7th have a totally b*****ks agreement/account number noted?

 

Looked like some chimp had hit the number 9 key about 20 times on mine, only the first 4 digits correct so not a clue what they think they're defaulting.

 

I'm half expecting to see another DN with the correct details on in a couple of months, almost looks like they're testing the water with these to see how many disputes come in.

[alfwithhair]

subbing with great interest

[blueotter]

Meant to ask....... did anyone elses dated the 7th have a totally b*****ks agreement/account number noted?

 

Looked like some chimp had hit the number 9 key about 20 times on mine, only the first 4 digits correct so not a clue what they think they're defaulting.

 

I'm half expecting to see another DN with the correct details on in a couple of months, almost looks like they're testing the water with these to see how many disputes come in.

 

 

Just checked mine,you're right,i have an incorrect account no on the default letter.Wait for a termination letter,don't do anything.