HUMBLEMAN vs HFC-WEIGHTMANS COURT ACTION

[humbleman]

This is a shortened version of

Phillip McGuffick –v- The Royal Bank of Scotland Plc (High Court, October 2009)

Enforcement of Credit Agreements – Good news for lenders

There has been a sharp rise in claims by borrowers seeking to challenge the enforceability of loan agreements regulated by the Consumer Credit Act 1974 (“the Act”) and subordinate legislation. Many borrowers are attempting to take advantage of the statutory framework of the Act to challenge their lenders and avoid paying back their debts. However, the High Court has recently provided clarification of the law which will be a welcome development for lenders and may discourage some claims by borrowers.

The Facts

Mr McGuffick borrowed the sum of £17,034 from The Royal Bank of Scotland (“RBS”) on 3 October 2005. The loan agreement between the parties was a regulated agreement under the Act. Unfortunately, Mr McGuffick was unable to meet the monthly instalments and repayments stopped within the first year of the term of the loan. RBS served a default notice upon Mr McGuffick under Section 87(1) of the Act, together with formal notice which stated that they intended to take action to recover the debt and that if Mr McGuffick did not bring his account up to date within 28 days of the letter, RBS would report the default to various credit reference agencies.

Mr McGuffick’s solicitors wrote to RBS requesting a copy of his loan agreement under Section 77 of the Act. Under this provision, RBS was obliged to produce a copy of the loan agreement within 12 working days. If it failed to do so, RBS would be prevented from taking enforcement action.

RBS could not find a copy of the loan agreement and so wrote to Mr McGuffick’s solicitors to say that it would not take enforcement action to recover the outstanding debt but that Mr McGuffick should continue to make repayments as the loan agreement was still in force. Further, RBS warned that, if Mr McGuffick failed to make his monthly repayments, RBS would report his continuing default to credit reference agencies.

In response to RBS’ failure to retrieve a copy of the loan agreement, Mr McGuffick commenced proceedings in the County Court alleging that the loan agreement was unenforceable and that RBS were prohibited from taking the action that they had threatened. The case was transferred to the High Court to be heard as a test case.

Main Issues

The High Court was invited to provide guidance upon a number of issues that had arisen as a result of the dispute between RBS and Mr McGuffick. RBS eventually managed to produce a copy of the loan agreement between the parties and was therefore able to take enforcement action to recover the debt in the usual way. However, Mr McGuffick’s claim raised questions regarding the status of the loan agreement and the contractual rights and duties of the parties during the period in which RBS was unable to comply with Mr McGuffick’s statutory request.

The Court considered, amongst other things, whether Mr McGuffick’s contractual obligation to pay the monthly instalments was suspended or extinguished during the period in which RBS had been unable to produce a copy of the loan agreement and whether the reports made by RBS to credit reference agencies regarding Mr McGuffick’s failure to pay under the agreement constituted enforcement action or ‘steps in enforcement’, which RBS may be prohibited from taking whilst it was unable to produce a copy of the loan agreement.

The Decision

The Court held, amongst other things, that where a loan agreement is rendered unenforceable as a result of a lender’s failure to comply with a statutory request for a copy of the relevant loan agreement, the lender’s rights are not extinguished. The borrower’s contractual obligation to make the monthly repayments is not suspended; it continues to apply. The parties’ contractual rights and obligations continued to exist during a period of default, though the lender was prevented from enforcing its rights during that time.

The Court decided that the threats made by RBS of reporting Mr McGuffick’s default to credit reference agencies and/or the reports made regarding the status of his loan account did not amount to enforcement action or ‘steps in enforcement’ under the Act. The Court concluded this was an essential aspect of responsible lending.

Comment

This decision provides useful clarification of what a lender can and cannot do during the period in which it is retrieving a copy of the loan agreement. Although a lender may not call in a loan or enforce a Judgment during this period, it may continue to report to credit reference agencies regarding the status of an account and take various other steps.

This case should encourage borrowers to continue to meet their contractual obligations to pay monthly instalments due under loan agreements in circumstances where a lender has been unable to provide a copy of their loan agreement. Lenders may find that a raft of similar claims are either withdrawn or amended. At a time when borrowers are becoming ever more aware of their statutory rights and are increasingly willing to challenge the enforceability of loan agreements, this decision is good news for lenders.

 

 

 

 

What about if a lender terminates the agreement whilst in default and them issues a claim.

 

 

 

Could you then argue s87 by saying yes the lender can default but not terminate and if it terminates then it would be unlawful rescission of contract

[foolishgirl]

Errrr... why? The Claimant should have their house in order.

 

Seems to me that this claimant (or his barrister) didn't have anything in order, couldn't produce the hat, never mind the rabbit yet he managed to get a magical verdict. Absolutely incredible!

 

You must appeal HM, don't let this one go...

[humbleman]

I am very much on track for appealing, I am just waiting to see if I can get some learned views on CAG. I am surprised that in almost 4 years none has gone to appeal at the Court of Appeal. If anyone has then they are keeping very quiet not wanting to share the outcome.

[middenmess]

After reading through that transcript not only do I have continued sympathy with you but also with every other person that has had the misfortune to appear before her.

[42man]

You might find this interesting too Humbleman - http://www.consumeractiongroup.co.uk/forum/legal-issues/195563-litigants-person-interesting-reading.html#post2118285 My feeling is reflected amongst others here who have read the transcript...

[DonkeyB]

Even at the Court of Appeal you will be banging on the door of a club you will never be allowed into. However, the scrutiny on the doorman is much greater!

 

While it may seem an obvious appeal, I think the key route is not so much the (alleged) bias of the judge (though it is very relevant), but the fact that there is so much she has gotten wrong in law.

 

As you stated so long ago, the claimant's barrister's comments are your good friend here.

[humbleman]

You might find this interesting too Humbleman - http://www.consumeractiongroup.co.uk/forum/legal-issues/195563-litigants-person-interesting-reading.html#post2118285 My feeling is reflected amongst others here who have read the transcript...

 

I have just had a read through this.

 

although he is right in his view about a layman, he should have also addressed the point that the Judges should be trained to follow the spirit of law and not be influenced by their personal views.

[seriously fed up]

I have just had a read through this.

 

although he is right in his view about a layman, he should have also addressed the point that the Judges should be trained to follow the spirit of law and not be influenced by their personal views.

 

Humbleman, if she had failed to follow the spirit of the law that wouldnt have been quite so bad, because the spirit of the law is a matter of judgement/ perception and that will vary from one person to another.

Her problem was a failure to apply what the law says - if they cant come up with the prescribed terms the account isnt enforceable. Ends

[middenmess]

How about the Francovich principle

 

 

Francovich principle - Wikipedia, the free encyclopedia

Edited January 18, 2010 by middenmess
no spaceing

[slick132]

Can posters please keep comments about the judge and the Claimant's Barrister respectful. We must avoid anything defamatory, for the Site's sake.

 

HM's case won't be helped by posts which are rude or disrespectful and, in the main, comments have been very constructive.

 

Thanks.

[the_shadow]

Humbleman, please take what I say in the spirit its given.

 

I feel you did yourself a dis-service with the witholding of the application/mailer/agreement/document until the trial, not just that but clearly your evidence bundle was lacking or non-existent. I feel from reading the transcript that this increased the judges more than obvious distaste at having to deal with a LiP in her court

 

That said she clearly wasnt objective from the start and appeared to turn the burden of proof from the claimant to the defendant, perhaps french origins?

 

I agree with whats been posted, you could I believe do a freedom of information act request to the court to find out all CCA cases she has sat at and upheld etc but this wont help, rather use the fact she helped establish the case for the claimant despite the opposition barrister clearly faltering and in fact in the end clinging onto her words as she turned a t&c document from 1999 into a 1998 doc, back to the future anyone?

 

Personally I'd start with the basics... that the claimant had no legal standing in the court room and never proved and more to the point was never required to prove thanks to the judge.....

 

Then the document that wasnt complete and prescribed terms that havent been proven to exist on said document/agreement....and work on from these two initial facts

 

Taking a step back I feel it may be a good thing she sat at your trial, if she hadnt there is a chance as a CJ she would be hearing your appeal:eek: not a good scenario at all.

 

Just my initial thoughts.

 

S.

Edited January 19, 2010 by the_shadow
Edited

[diddydicky]

This is a shortened version of

Phillip McGuffick –v- The Royal Bank of Scotland Plc (High Court, October 2009)

Enforcement of Credit Agreements – Good news for lenders

There has been a sharp rise in claims by borrowers seeking to challenge the enforceability of loan agreements regulated by the Consumer Credit Act 1974 (“the Act”) and subordinate legislation. Many borrowers are attempting to take advantage of the statutory framework of the Act to challenge their lenders and avoid paying back their debts. However, the High Court has recently provided clarification of the law which will be a welcome development for lenders and may discourage some claims by borrowers.

The Facts

Mr McGuffick borrowed the sum of £17,034 from The Royal Bank of Scotland (“RBS”) on 3 October 2005. The loan agreement between the parties was a regulated agreement under the Act. Unfortunately, Mr McGuffick was unable to meet the monthly instalments and repayments stopped within the first year of the term of the loan. RBS served a default notice upon Mr McGuffick under Section 87(1) of the Act, together with formal notice which stated that they intended to take action to recover the debt and that if Mr McGuffick did not bring his account up to date within 28 days of the letter, RBS would report the default to various credit reference agencies.

Mr McGuffick’s solicitors wrote to RBS requesting a copy of his loan agreement under Section 77 of the Act. Under this provision, RBS was obliged to produce a copy of the loan agreement within 12 working days. If it failed to do so, RBS would be prevented from taking enforcement action.

RBS could not find a copy of the loan agreement and so wrote to Mr McGuffick’s solicitors to say that it would not take enforcement action to recover the outstanding debt but that Mr McGuffick should continue to make repayments as the loan agreement was still in force. Further, RBS warned that, if Mr McGuffick failed to make his monthly repayments, RBS would report his continuing default to credit reference agencies.

In response to RBS’ failure to retrieve a copy of the loan agreement, Mr McGuffick commenced proceedings in the County Court alleging that the loan agreement was unenforceable and that RBS were prohibited from taking the action that they had threatened. The case was transferred to the High Court to be heard as a test case.

Main Issues

The High Court was invited to provide guidance upon a number of issues that had arisen as a result of the dispute between RBS and Mr McGuffick. RBS eventually managed to produce a copy of the loan agreement between the parties and was therefore able to take enforcement action to recover the debt in the usual way. However, Mr McGuffick’s claim raised questions regarding the status of the loan agreement and the contractual rights and duties of the parties during the period in which RBS was unable to comply with Mr McGuffick’s statutory request.

The Court considered, amongst other things, whether Mr McGuffick’s contractual obligation to pay the monthly instalments was suspended or extinguished during the period in which RBS had been unable to produce a copy of the loan agreement and whether the reports made by RBS to credit reference agencies regarding Mr McGuffick’s failure to pay under the agreement constituted enforcement action or ‘steps in enforcement’, which RBS may be prohibited from taking whilst it was unable to produce a copy of the loan agreement.

The Decision

The Court held, amongst other things, that where a loan agreement is rendered unenforceable as a result of a lender’s failure to comply with a statutory request for a copy of the relevant loan agreement, the lender’s rights are not extinguished. The borrower’s contractual obligation to make the monthly repayments is not suspended; it continues to apply. The parties’ contractual rights and obligations continued to exist during a period of default, though the lender was prevented from enforcing its rights during that time.

The Court decided that the threats made by RBS of reporting Mr McGuffick’s default to credit reference agencies and/or the reports made regarding the status of his loan account did not amount to enforcement action or ‘steps in enforcement’ under the Act. The Court concluded this was an essential aspect of responsible lending.

Comment

This decision provides useful clarification of what a lender can and cannot do during the period in which it is retrieving a copy of the loan agreement. Although a lender may not call in a loan or enforce a Judgment during this period, it may continue to report to credit reference agencies regarding the status of an account and take various other steps.

This case should encourage borrowers to continue to meet their contractual obligations to pay monthly instalments due under loan agreements in circumstances where a lender has been unable to provide a copy of their loan agreement. Lenders may find that a raft of similar claims are either withdrawn or amended. At a time when borrowers are becoming ever more aware of their statutory rights and are increasingly willing to challenge the enforceability of loan agreements, this decision is good news for lenders.

 

 

 

 

What about if a lender terminates the agreement whilst in default and them issues a claim.

 

 

 

Could you then argue s87 by saying yes the lender can default but not terminate and if it terminates then it would be unlawful rescission of contract

 

it seems to me that people make far too much of this

 

the creditors rights have always been preserved- if you prove the debt legally unenforceable it nevertheless is still a debt and always has been

 

nothing has changed

 

a report to a credit agency that payments have not been made is a matter of fact not opinion.

 

it is unreasonable in my view to expect an agency set up to protect the interests of lenders to behave any differently than for cag not to look after its members interests

 

it is open to anyone to add a note to a CRA file as to the reason for the missed payments

 

if you challenge your agreements you are going to get shafted in the CRA files, even if only for revenge when you beat them

 

if you want to maintain your credit file then DONT stop paying whilst you dispute debts.

 

you cant make an omlette without breaking a few eggs

[davefirewalker]

Humbleman, if she had failed to follow the spirit of the law that wouldnt have been quite so bad, because the spirit of the law is a matter of judgement/ perception and that will vary from one person to another.

Her problem was a failure to apply what the law says - if they cant come up with the prescribed terms the account isnt enforceable. Ends

 

They did come up with the prescribed terms........just not the ones NOT on the application....

 

the judge swallowed it and HM lost....its a disgrace

 

Amex tried it with me......I have yet to do something about that, although I dont owe them any money.......I may take it up at a later date

 

they sent me a fifteen page t&c document and this "would have been on the back " ????? yes ok mmmmmm oh and it had defaults at £12 I took the agreement out in 1999......when defaults were at least £20......i will bide my time

 

rgds

 

Dave

[humbleman]

it seems to me that people make far too much of this

 

the creditors rights have always been preserved- if you prove the debt legally unenforceable it nevertheless is still a debt and always has been

 

 

My point was not that of creditors right etc. My point was more to do with -

 

What about when a lender terminates the agreement whilst in default and them issues a claim and then during the course of the claim try and remeday the situation.

[stripper]

Thanks for posting the transcript Humbleman.

It's just that reading through it does make it difficult not to make comments that express feelings of anger.

However,you have my support,well done for such a sterling performance.

Stripper:(

[humbleman]

Humbleman, please take what I say in the spirit its given.

 

I feel you did yourself a dis-service with the witholding of the application/mailer/agreement/document until the trial, not just that but clearly your evidence bundle was lacking or non-existent. I feel from reading the transcript that this increased the judges more than obvious distaste at having to deal with a LiP in her court

 

S.

 

This mailer thing was not done intentionally. I never thought that the Judge would buy the claimants story. There was only ever one possible outcome. Don't forgot that when we left for the recess to come back for the Judgment the Judge asked me to bring back the printout of the copy mailer, when we returned she had already written out the Judgment, What I am trying to say is that she did not want me to have a chance to put aside on the ground of new evidence and wanted this as part of disclosure that has already been relied upon.

 

For gods sake she is giving me grief for non disclosure, what about the assignment that the claimant has had 18 months to come up with, and it's so recent that if their so called big company advised by lawyers and so on was to be taken seriously where is the assignment that only took place during the course of this claim.

 

 

 

Taking a step back I feel it may be a good thing she sat at your trial, if she hadnt there is a chance as a CJ she would be hearing your appeal:shock: not a good scenario at all.

 

S.

 

Exactly my thought.

Edited January 19, 2010 by humbleman

[humbleman]

What seems to be happening is that the lenders are with the help of a series of carefully planned trials trying to re-write the CCA 1974. I can remember 4 years ago if they didn't have an agreement not only would they write off the balance but also remove data from the credit file. Now in courts they bring in an application form with any t & c's and that suffices for not only s.77/s.78 but also for enforcement.

 

The legal profession who are sympathetic to consumers are also very guarded to see these lender in the higher courts since it will reduce their future income if there is a landmark ruling in favour of the consumer.

[seriously fed up]

absolutely right Humbleman. If you look at McGuffick you can see an example of this

"The Court decided that the threats made by RBS of reporting Mr McGuffick’s default to credit reference agencies and/or the reports made regarding the status of his loan account did not amount to enforcement action or ‘steps in enforcement’ under the Act. The Court concluded this was an essential aspect of responsible lending.!

The Act is quite clear "(6) If the creditor under an agreement fails to comply with subsection (1)— (a) he is not entitled, while the default continues, to enforce the agreement;"

Enforcement such as reporting to CRAs is not "an essential aspect of responsible lending" (though I can see the argument). In the context of the CCA, as long as the s78 request is outstanding, they are not entitled to do it. THAT IS THE LAW, and its not for a judge to substitute their view for the law. Its bad enough when they put their own, unreasonable construction on the law, but when they simply ignore it, as they have done here and in your case Humbleman, it is simply intolerable and it has to be stopped

[BeauBrummie]

What seems to be happening is that the lenders are with the help of a series of carefully planned trials trying to re-write the CCA 1974. I can remember 4 years ago if they didn't have an agreement not only would they write off the balance but also remove data from the credit file. Now in courts they bring in an application form with any t & c's and that suffices for not only s.77/s.78 but also for enforcement.

 

The legal profession who are sympathetic to consumers are also very guarded to see these lender in the higher courts since it will reduce their future income if there is a landmark ruling in favour of the consumer.

 

Wholly agree with this analgy Humbleman,

 

I lost my case with Cabot with the DJ hiding under the umbrella of the McGuffick case---which everyone on here thought was wrong and I even think that The DJ thought it was wrong with hindsight, as my leave of appeal was extended from 21 to 90 days!!

 

I have spent the best part of 3 hours reading through your thread last night trying decide if I should continue with my case---at this point I am still unsure and actually have very little time left (8 days) so I still have time but as you say, am I going to come up against another member of the "club" who does not see justice, and only wishes to further the cause of the financial machine that got most of into this mess and not the law which is supposed to be there for everyone!!

 

For the record the turn of events in your case seems to be a recent trate over the last three months and as I have commented on other threads --- CAG needs a stratgy to deal with this beacuse although wholly wrong the Finance Industry has alot more muscle that the "little ole consumer" and they are learning how to defeat this onslaught of consumer rights by whatever method they see fit or can get away with.

 

Again for the record the judgment against you stinks and although I am not in a position financially to help I wish you all the luck if you decide to appeal this rediculous decision.

 

Beau

Edited January 19, 2010 by BeauBrummie
try using english beau it helps!!

[foolishgirl]

How about the Francovich principle

 

Francovich principle - Wikipedia, the free encyclopedia

 

Can you explain how would you see this applying in HM's case please, middenmess?

[justify]

After reading through that transcript not only do I have continued sympathy with you but also with every other person that has had the misfortune to appear before her.

 

I agree with this and almost all the other comments. This gives a horrendous insight into the injustices that go on in court. I didn't believe the judge could have been that biased, but there it is, in black and white. Incredible. Were any press there - just a thought?

 

If I were in your shoes and able to afford to do so, there is no doubt I would appeal.

 

J

[humbleman]

I agree with this and almost all the other comments. This gives a horrendous insight into the injustices that go on in court. I didn't believe the judge could have been that biased, but there it is, in black and white. Incredible. Were any press there - just a thought?

 

If I were in your shoes and able to afford to do so, there is no doubt I would appeal.

 

J

 

No Press.

 

I am looking at starting a thread on Appeal ONLY, hoping that i will get response on the merits of my case and in the meantime I am getting quotations from barristers. If they advice with 99% certainty then I will go for appeal assuming I can afford the same.

[humbleman]

Thread on my appeal here

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/242949-humblemans-appeal-please-read.html#post2710512

[stripper]

These recent judgements have gone against the consumer because legal representation is in most cases out of our reach.How can we argue our case as effectively as a trained Barrister? We just do not have their legal expertise.

Even though it is obvious that our knowledge and understanding of CCA is in many cases, more extensive than that of the opposition.(as proved by many threads on this site).It's all a matter of cost.

Is it therefore pointing toward 100% legal representation for consumers in CCA cases, or lose?

Stripper:mad:

[Laura Cooke]

Read the transcript Judge seems to be ok in places at the beginning but seems very one sided on allowing barrister a lot more time and sympathy I AM NATURALLY ON THE DEFENDENTS SIDE BUT MY PERSONAL NOTINGS OF THE TRANSCRIPT ARE:

 

(G) page 11 applicant couldn`t prove that terms/conditions were on the back and they have to do that?

 

(D) page 13 refused to let defendant provide document

 

(D) page 14 did agree with judge here (sorry) but defendent didn`t see very organised and could have been deemed to have deliberately witheld the document that should have been dislosed if he was then relying on it

 

(B) page 15 Defendent would have helped himself bu having the document printed off ready instead of using the laptop to argue his case

(F) page 15 defendent wasn`t able to prove what was on other side of application but surely this wasn`t his place to neither could applicants!!!

 

(A) page 16 seemed a fair comment by judge that defendent should have

disclosed the application as IMO had he done so he probably would have won? (maybe not with such a biased judge)

(D) page 16 Barrister alarmed at defendent disclosing application on his lap top he might have been but defendent could quite easily have said he too was alarmed at the amount of paperwork the applicant was relying on that he had not got with him!!

 

(D) page 17 Judge was deliberately stopping defendent from raising issues

(G) page 17 Judge should have known what a equitable assignment was?

 

© page 18 Applicant never pulled up (yet again suprise suprise) at not having a document which was crucial to defendant

 

(20) Judge was probably right in saying documents defendent hoped to rely on should have all been in the court bundle (accept that one couldn`t as it only came out 3 days previously)

 

(G) page 21 Judge totally out of order in her personal/biased comment

(B) page 21 Again Judge out of order with her biased comment

 

(B) page 22 By his own admission Barrister for the applicant said he had not arrived with documents that were needed

(D) page 22 Barrister supports defendent about the witness statement

(f) page 22 Defendent clearly pointed out to judge that dates on document didn`t relate to his account this was blatantly ignored

 

© page 23 Judge did allow documents to be submitted which had not been disclosed

 

(A) page 25 Felt defendent should have mentioned this earlier

(G) page 25 Judge should have given a lot of preference to the dates on these documents and them not relating to each other

 

(A) page 27 Judge totally biased

(E) page 27 Did agree that what let defendent down was none disclosure of the application which he later tried to rely on

(H) page 27 Judge totally biased yet again allowed Barrister to make more comments but had literally told defendent that he`d been allowed enough time to say anything and wasn`t going to be allowed any more platform

? page 27 Judge clearly preventing defendent from having his say

(F) Judge almost indicating in a comment she makes that the case as been decided in favour of applicant before end of morning session

 

(E) page 31 Judge tried humiliating defendent with her personal/biased remarks

(G) page 31 Amazingly Barrister was allowed at last minute to disclose an email allegedly sent by defendent without any remark made by Judge yet she`d slated defendent for same actions

 

I HOPE NO OFFENCE TAKEN BY POINTS I`VE MADE I TRULY WHOLE HEARTEDLY WANT HUMBELMAN TO WIN THIS APPEAL AND SHAME THIS JUDGE

Edited January 19, 2010 by Laura Cooke