Don Leocornay Vs HSBC

[hsbcfiddled]

Don, Have you seen this

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/108467-basic-introduction-consumer-credit.html

 

Might be something here to help you.

 

fiddled

[Castlebest]

If you go into a court situation it will depend as much on the characters present as the legal arguments .

 

Can you state your case clearly so the Judge understands exactly what your saying?

 

Is your Judge open minded or prejudiced against penalty charge litigants in person... or maybe prejudiced against litigants in person generally?

 

How good and well briefed is the defendants representative?

 

Until you get into the Judges office you wont know any of these things, all you can do is know your own arguments backward and try to research things that the defendants representative might say... be prepared

 

You have to impress the Judge with your arguments in a cool understandable and controlled manner, he makes the decision and that is the result you are after .

 

I have to admit I'm mildly addicted to going to court, I love it but I have never lost as such... not always got the decision I wanted but always got close enough to be an acceptable outcome

 

pete

[don leocornay]

i've just seen it fiddled, thanks!

 

The following paragraph has got me exited but am not holding my breath yet:

 

Establish that the Credit Agreement is valid,

 

If they fail to provide a signed credit agreement, and the agreement was made before 2004, in most cases (i.e. not an overdraft agreement, or a non-commercial agreement) you have a completely open and shut case. You’ve won.

 

Tomterm will be getting a PM from me

[don leocornay]

Response sent to FOS. Sitting back and waiting.

[don leocornay]

Couple of updates:

 

1/ DG have started chasing again. They claim they are chased for a bank account not a loan therefore CCA doesn't apply. Reply to them will sort that out along with final demand.

 

2/ My solicitor neighbour has got back to me. Basically with the following:

- The loan is definitely unenforceable

- It highly unlikely I'd get anything back from HSBC through the courts.

 

The full doc i'll post below.

 

Action points now. Another letter to HSBC telling them that they don't have a leg to stand on. Confirm the debt to be unenforceable and take all notes off my credit file. In other other words "they should blow it out their a***s!"

[don leocornay]

IN THE MATTER OF

 

DON LEOCORNAY Prospective Claimant

-v-

HSBC Prospective Defendant

ADVICE

 

SUMMARY OF FACTS

• Those instructing me are no doubt familiar with the facts of this matter. In 2003 Don held a graduate account with HSBC which included an overdraft facility and a credit card. Don was also in receipt of a loan for £7,500, this amount having been lent at a rate of 7.9% APR. Having apparently exceeded his credit limit, Don was given a new card with a higher limit. Shortly after the change the balance outstanding on the new credit card was £2,100 (£1000 over the limit). I have not been informed of the interest rate applicable to this card.
  

• Don was unable to maker repayments and following numerous communications from the bank agreed to consolidate all of his debt into a single loan (the “managed loan”)from HSBC. According to my instructions the managed loan was agreed over the telephone and the only information given to Don was that his monthly repayment would be lower. He was not provided with details of the annual percentage rate of interest nor with the length of the term. The rate was subsequently discovered to be 14% with a repayment term lasting until 2014. A written contract was never signed.
  

• This advice is drafted on the basis of the information provided and without the benefit of the following: The precise date the new agreement was entered into; the extent of Don’s indebtedness to the bank at the time, specifically the amount left owing in respect of the graduate loan, overdraft and credit card balance; the full amount lent under the single consolidated loan; the “true copy” of the agreement provided to Don by the bank; details of the amount owed to the bank at the point at which Don stopped paying; the amount registered by the bank in the default notice.
  

• The precise nature of the request for advice is unclear from the e-mail with which I have been provided however I understand that I am asked to advise on the merits of Don making a claim against the bank to recover the payments he has made under the managed loan.
  

CAUSES OF ACTION

• I have considered the following possible bases for making a claim however in my opinion only the first ground has any realistic prospect of success:
  

Absence of signed agreement

The agreement entered into between Don and the bank is one which is regulated under the Consumer Credit Act 1974 (“the Act”). Section 61 requires that a regulated agreement be contained a written document which has been signed by both parties. Failure to do so means that the agreement has not been properly executed.

The consequence of improper execution is that the agreement cannot be enforced without an order of the court and in a case such as this, where a signed document has never existed, the court is prohibited from making such an order by section 127(3) of the Act. The agreement is therefore unenforceable.

Failure to specify terms

5.2.1. Any regulated agreement will also be unenforceable where the written agreement does not contain certain specific pieces of information including the rate of interest and the number of repayments (schedule 6 Consumer Credit (Agreements) Regulations 1983). Although it seems clear that Don was not provided with this information over the telephone it is the content of the written agreement which counts for this ground and it seems unlikely that such terms were missing from the written albeit unsigned agreement. Accordingly the agreement is not unenforceable on this ground.

Extortionate credit bargain

5.3.1. In his e-mail Don states that he wishes to rely on the case of Wilson v First County Trust but in my opinion the comparisons between that case and the present are unfavourable to Don.

5.3.2. Mrs Wilson had entered into a loan agreement under which she provided her car as security and was charged a rate of interest of approximately 95%. The judge at first instance found that because of this the agreement was extortionate and then proceeded to set a new rate of interest. Later proceedings focused on the lack of a signed agreement however the very high rate remained an important background factor. As a result of the judgement Mrs Wilson paid to the lender the new sum set by the judge and received her car back.

5.3.3. According to section 138 an agreement is extortionate if it requires the debtor to make payments which are grossly exorbitant or otherwise grossly contravenes the principles of fair dealing. In considering whether this test is met the court will look at the prevailing rate of interest at the time the agreement was made and also to the age, experience and financial pressures faced by the debtor.

5.3.4. In previous cases rates as high as 70% have been found not to be extortionate and although the rate of interest of 14% charged by HSBC in 2004 was at the upper end (other high street banks around 7-9% advertised) the likelihood the court would find the rate to be exorbitant rather than simply “a bit high” is very low.

Economic duress

5.4.1. That Don found himself in difficult financial circumstances cannot be doubted, nor that he entered into the agreement because he felt, following the bank’s threat to take legal action if he did not repay the amounts already owing, that he had no other alternative than to take the offered loan. Unfortunately the threat to take legal action was one the bank was entitled to make and where the threat is to perform lawful act, it is difficult if not impossible to make a successful claim ( CTN Cash & Carry Ltd v Gallagher Ltd 1994 4 All ER 714).

Undue Influence

5.5.1. In order for the Court to find that one party has exercised, or must be presumed to have exercised undue influence over the other party, the agreement entered into must be inexplicable by the relationship between the parties or ordinary motives. In the present case, Don’s decision to enter into the loan agreement is easily explicable by his need for a workable means of repaying his debt and not because the bank has in some way illegitimately coerced him.

Unconscionable bargain

5.6.1. The authorities on this area of law are at best unclear, it not even being agrees whether this can be a separate ground for complaint. In any event the Court will not intervene simply because HSBC was in a position of strength compared to Don (Hart v O’Connor 1985 AC 1000) and would need to find impropriety in the manner the agreement was reached and in the actual terms. In the light of what has been said above at paragraph 5.3 I do not consider that such a ground has any reasonable prospect of success.

Misrepresentation

5.7.1. Silence cannot by itself amount to a misrepresentation and for that reason the failure of the bank’s agent on the telephone to provide full details to Don can provide no assistance to Don’s potential claim.

REMEDIES

6. Don’s claim gives rise to the following possible remedies, damages being unavailable as there has been no breach of contract or misrepresentation:

1) Declaration of unenforceability

6.1.This is one form of relief which the Court would certainly grant to Don and would provide him with the benefit of legal certainty that the bank could not pursue him for the remainder of the money he owes. However it would not of itself provide him with any other relief or repayment.

2) Rescission

6.2.1 This is what Don is really seeking when he states he wishes the bank to repay all monies paid by him under the loan agreement, for the contract to be rescinded and both he and the banks restored to their original pre-contractual positions. This would mean the repayment to Don of sums paid by him but would also leave him with the original debt to be paid (i.e. whatever he owed in 2004). This being an equitable and therefore discretionary remedy there are a number of difficulties in this regard.

6.2.2 Firstly the Court may decide that Don has affirmed the contract by making repayments even after he discovered the rate and repayment period in 2005.

6.2.3 Secondly there is a delay of around 4 years between the making of the contract and the making of the claim.

6.2.4 In my opinion the circumstances of this case are too far removed from those of cases such as Wilson where Mrs Wilson received her money back because she had repaid the money for the car following a mistaken judgement by the Court that the agreement was enforceable when it was not. I do not therefore consider that the Court would order repayment of the sums paid but would take the view that Don would be dealt with equitably by simply making the declaration of unenforceability entitling him to make no further repayments despite there still being an amount owed to the bank.

3) Re-opening of the agreement

6.3 Unless the credit agreement was found to be extortionate this would not be an option for the Court. If the Court did find the loan agreement to be extortionate then the outcome would be the determination by the Court of fair terms which would then be imposed upon both Don and the bank.

SUMMARY OF CONCLUSIONS

 

1) The loan agreement is unenforceable

2) There are no other bases for the potential claim

3) The only remedy a court is likely to grant is a declaration of unenforceability

NEXT STEP

 

7. The practical import of the above conclusions is that if Don does pursue a claim against the bank, he is likely only to be told that the agreement is unenforceable and for that will have to pay the standard fee to issue a claim and then engage in a potentially lengthy court process. In light of this, my advice would be simply to write a letter to HSBC informing them that action is being contemplated and seeking agreement from them that they will not be trying to enforce repayment of the loan for the reasons set out in paragraphs 5.1 and 5.2.

[johnnymitch]

Thanks for that Don - sets it out with great clarity ........

 

Basically , unenforceability is the argument.... and they can't take you to court if they don't have a signed agreement.........

[car2403]

Basically , unenforceability is the argument.... and they can't take you to court if they don't have a signed agreement.........

 

Well, not quite... They can take you to Court, but they won't win.

 

[johnnymitch]

you are right as usual Car 2403....... LOL !

[don leocornay]

btw that's from a barrister.

[johnnymitch]

Valuable stuff then, Don - and it's free ---- . Thanks again!

[don leocornay]

well for you guys it is. I haven't got the bill yet ;-)

[robcag]

well for you guys it is. I haven't got the bill yet ;-)

 

And there we were, all were thinking your solicitor neighbour was just being good neighbourly. Oh well, perhaps it'll be heavily discounted!

 

Cheers

Rob

[don leocornay]

i'm sure it will.

 

The barrister's a friend of my lawyer neighbour. She'll get paid. Neighbour will get a bottle of wine (and maybe some help with his accounts if he asks me nicely)

[don leocornay]

DG are still chasing me. and they claim that they don't need an agreement becuase they're chasing a bank account.

 

About £200 of what they're chasing IS for the current account but it's all bank charges for failed S/O's when I transferred my salary to another account. The rest is £2.51 from a savings account.

 

Letter has been sent telling them to get their facts straight.

[car2403]

DG are still chasing me. and they claim that they don't need an agreement becuase they're chasing a bank account.

 

About £200 of what they're chasing IS for the current account but it's all bank charges for failed S/O's when I transferred my salary to another account. The rest is £2.51 from a savings account.

 

Letter has been sent telling them to get their facts straight.

 

They don't need an agreement, but they do need to prove they complied with a s.74 CCA 1974 Determination issued by the OFT regarding overdrafts before they have an enforceable debt;

 

To help clarify these matters, this is an extract from a Court case (Coutts v Sebastyen) and is part of the summing up by the Judge in relation to effect on overdrafts and the function of the CCA in such circumstances;

 

“The Defendant provided an overdraft on the account;

a. The agreement was a regulated debtor-creditor agreement within the meaning of s.8 and s.13© of the Consumer Credit Act 1974, providing for 'running-account credit' within the meaning of s.10(1)(a) of the Act (in effect, a revolving credit within an agreed credit limit); and

b. That, as such, it was subject to the requirements of Part V of the Act (including the requirements as to documentation set out in sections 57 to 63 of the Act) save and in so far as it was excluded or exempted from such requirements.

 

Section 65 in Part V of the Act provides that an "improperly executed" regulated agreement is unenforceable by the creditor without a court order. It is common ground that a regulated agreement is "improperly executed" for this purpose if the requirements of sections 57 to 63 have not been complied with.

 

Section 74 of the Act provides for the exclusion of certain agreements from Part V. It provides as follows (so far as material):

"74. – (1) This part …. does not apply to –

(b) a debtor-creditor agreement enabling the debtor to overdraw on a current account, …

(3) Subsection 1(b) … applies only where the OFT so determines, and such a determination –

(a) may be made subject to such conditions as the OFT thinks fit …

(3A) …. in relation to a debtor-creditor agreement under which the creditor is …. a bank …. the OFT shall make a determination that subsection 1(b) above applies unless it considers that it would be against the public interest to do so.

 

THE DETERMINATION:

 

The Determination (which is signed by the Director of Fair Trading) is made under section 74(3) of the Act. I set it out in full:

"1. Under the powers conferred upon me by s.74(3) and (3A) and s.133 of the Consumer Credit 1974, I, the Director General, being satisfied that it would not be against the public interest to do so, hereby revoke with effect from 1st February 1990 the Determination made by me in respect of Section 74(1)(b) and dated 3 November 1983 and now determine that with effect from 1st February 1990 Section 74(1)(b) shall apply to every debtor-creditor agreement enabling the debtor to overdraw on a current account, under which the creditor is a bank.

2. This Determination is made subject to the following conditions:-

(a) that the creditor shall have informed my Office in writing of his general intention to enter into agreements to which the Determination will apply;

(b) that where there is an agreement between a creditor and a debtor for the granting of credit in the form of an advance on a current account, the debtor shall be informed at the time or before the agreement is concluded:

- of the credit limit, if any,

- of the annual rate of interest and the charges applicable from the time the agreement is concluded and the conditions under which these may be amended,

- of the procedure for terminating the agreement;

and this information shall be confirmed in writing.

© that where a debtor overdraws his current account with the tacit agreement of the creditor and that account remains overdrawn for more than 3 months, the creditor must inform the debtor in writing not later than 7 days after the end of that 3 month period of the annual rate of interest and charges applicable.

3. In this Determination the terms 'creditor' and 'debtor' shall have the meanings assigned to them respectively by Section 189 of [the Act]. The term 'bank' includes the Bank of England and banks within the meaning of the Bankers' Books Evidence Act 1879 as amended."

[don leocornay]

I'm not sure I understand.

 

The debt they're chasing is:

 

Managed Loan: £8,922.47

Current Account: £216.10

Savings Account: £2.51

Total: £9,141.08

Based on HSBC's final demand. DG are chasing £9,254.84 (i guess they've added their own charges).

 

What's the position here? Do they need an agreement or not?

Edited October 16, 2008 by don leocornay
saved too early

[car2403]

What's the position here? Do they need an agreement or not?

 

The overdraft debt is covered by the CCA, but is exempt from the requirements of s.60/s.61, in that it doesn't need to conform to the form and content of the agreement regulations to be enforceable. It does, however, because of the Determination above, have to comply with the requirements of the Determination to be enforced by a Court.

[don leocornay]

So what's the implication if I offer to pay off the overdraft only?

 

How would a judge view this?

 

I think the next port of call is LBA. And basically say if you don't go to court, I will. but I'll be honest this bit re: the overdraft is worrying me a bit.

[don leocornay]

going a bit left field here. I've been looking at some other threads, which mention the use of s142(1) of CCA.

 

Does anyone know anything about this part of the act?

[car2403]

So what's the implication if I offer to pay off the overdraft only?

 

How would a judge view this?

 

I think the next port of call is LBA. And basically say if you don't go to court, I will. but I'll be honest this bit re: the overdraft is worrying me a bit.

 

Not sure why you'd pay a debt that appears unenforceable, until proven otherwise, and is made up of unlawful charges?

 

The claim regarding this debt would have to be discontinued (in part) based on the fact you've paid it, if you did. If they didn't discontinue, you'd have a complete defence because the debt is paid.

 

The other way to look at this, which is probably what the Judge would think, is that if you pay the overdraft debt off, you're acknowledging that part of the debt, so you must acknowledge the rest of the debt as well. This could be damaging to your case.

 

going a bit left field here. I've been looking at some other threads, which mention the use of s142(1) of CCA.

 

Does anyone know anything about this part of the act?

 

s.142(1) allows you to apply to the Court for an order stating the debt is unenforceable. The inevitable response to that is a claim/defence/counterclaim for the balance outstanding and you'd have to prove the debt is unenforceable before the Court would consider issuing the order.

 

In all reality, you wouldn't bring a claim against them if they don't take you to Court, but you should make an application under s.142(1) for an order of unenforceability.

 

I brought a claim against Barclays and was told by the Judge that the correct process would have been to apply for an order of unenforceability. He did go on to say that the whole process of claiming/seeking an order was pretty much the same, but Barclays was given extra time to issue a response to my application when the Judge ruled that the claim form issued against Barclays should be deemed to be an application under s.142(1) - had I issued the application first, they wouldn't have been given that extra time to respond to it;

 

http://www.consumeractiongroup.co.uk/forum/barclays-bank/110184-car2403-barclays-bank-default.html

[don leocornay]

So action point should be an application to the county court to declare the managed loan unenforceable under s142(1) and therefore the 'debt' should be set aside?

 

The basis being that no agreement was ever signed meaning the 'agreement'

- is improperly executed subject to s61,

- can only be enforced by order of the court subject to s65

- and that the judge cannot make an enforcement order under s127

 

would this mean an N1 court claim?

 

Does this sound right?

[car2403]

Right process, wrong form.

 

You'd use a N244 Application Notice;

 

http://www.hmcourts-service.gov.uk/courtfinder/forms/n244_e.pdf

 

It would be worth asking Site Admin or the likes to check over this, though - I started my claim with the N1 and was told that was wrong, but the Judge allowed it outside of process at his discretion. I'd hate for you to do the wrong thing and not be allowed discretion if it's wrong!

[don leocornay]

draft of final letter to HSBC. Should I put as is or convert to and LBA?

Thanks guys!

HSBC Bank Plc

DATE

To Whom It May Concern:

Ref: Don Leocornay. Managed Loan XXXXXXXX

This is a final attempt to get HSBC to act in an appropriate manner, whilst avoiding the delay and cost a court case. I wish to sever all ties with the bank and believe this to be the quickest and most amicable way to do so.

I re-iterate, I have never signed any documentation for Managed Loan account xxxxxxxx and following my initial request in March 2007 you have not been able to provide a copy that bears my signature. In fact you have called into question yourselves whether such a document exists.

Therefore subject to s61, s65 and s127 of the Consumer Credit Act, HSBC:

1/ did not properly executed this ‘agreement’

2/ can only go to court to enforce the ‘agreement’

but

3/ No judge will give an enforcement order under this ‘agreement’.

Anything other than the original signed document that you would provide to support any case you bring against me would be irrelevant because you do not have the original agreement to rely upon in Court.

If this goes to court, you will not win.

This ‘Managed Loan’ is UNENFORCEABLE.

In order to put an end to this situation, you must now do the following:

1/ Confirm that no original agreement exists for Managed Loan XXXXXXXX

2/ Stop all action against me to enforce this alleged debt.

3/ Remove all defaults and other information regarding Managed Loan account xxxxxxxx, Current Account XXXXXXXX and Savings Account XXXXXXXX from ALL credit referencing agencies, in particular:

• Equifax
  
• Experian
  
• Call Credit
  

Please provide written confirmation of these actions within 14 days.

 

 

 

Yours faithfully,

 

 

Don

[pt2537]

Right process, wrong form.

 

You'd use a N244 Application Notice;

 

http://www.hmcourts-service.gov.uk/courtfinder/forms/n244_e.pdf

 

It would be worth asking Site Admin or the likes to check over this, though - I started my claim with the N1 and was told that was wrong, but the Judge allowed it outside of process at his discretion. I'd hate for you to do the wrong thing and not be allowed discretion if it's wrong!

I do not believe that you took the wrong route Car, infact i would submit that in fact the part 7 route is indeed the correct route to go down in that circumstance.

 

part 8 would not be appropriate as part 8 is used where there is no dispute of facts and clearly its a matter of fact if the agreement does not contain the prescribed terms

 

 

Applications can be used for pre claim cases, however im not convinced that this would be the correct route to go down