Default Notice Re-Issue

[Notasniceasjoe]

Might be a daft question, but if the Regulated actually means something when it occurs in the phrase "Credit Agreement Regulated by the Consumer Credit Act 1974" then if adherence to those regulations can be sidestepped by falling back on the common law it appears, to the layman, that those regulations are not worth the paper that they are printed on. Is that actually the case?

 

If a Credit Agreement states that the agreement can be terminated (and any outstanding balance must be payed), subject to the service of any notice required by law then, if such a notice is not properly served, in the manner prescribed by those regulations, doesn't that mean that the agreement has not, and cannot, be terminated in connection with the breach with which that default notice deals, without providing that completely valid Default notice?

[chez262]

This is not a new idea years ago you used to be able to buy a kit to "clean up your credit record" it consisted of a formated letter to the court asking for the judgement to be set asside because you did not recieve a default, the idea was tht as soon as you recieved the set aside notice you sent it of to the CRA registry(this was before computers) and this would give you a window to be able to negotiate with the creditor or apply for credit.

 

The creditor would of course re issue the default and terminate correctly in most cases but sometimes it would be to mouch trouble and you would get away with it.

 

THe real issue here which i think is being forgotten is the function of the DN it is not an agreement it is just notice of an action to recover, if the notice is incorrect it just needs to be re issued, that is how the court will see it. The termination issue is really not relavant never was, every one on here is gioing on about how they have been predjudiced by the termination, believe me the court will not see that, they will see how the creditor has been impeded in collecting his money

There is no loophole here trminationn af an agreement can be made at any time by either party so there is no such thng as unlawful termination.

 

A default termination cannot be isseued on a incorrect default if it couold it would not be a default temrination. A contractural termination or a section 98 will be a termination to draw credit usually and even if it is a full termianation, it is not a temination on breach of the act, it is the breach that makes the default actionable not the temination.

 

Peter

 

What if the termination without a DN states it is due to a default on the account, this surely rules out s98?

I understand the theory around a faulty DN however if no DN is sent and a termination is made by the creditor on the grounds of a default, how can they un-terminate without re-signing paperwork? If they terminate, they end the agreement. If they disregard the legislation put in place and 'take' one of the benefits only owed to them if they follow suit then how can that be 'fixable' with a DN and another TN when the agreement in question has been wrongfully terminated.

If the claimants plead mistake is it not clear they have breached and therefore made grounds for invalidating the agreement??

[chez262]

Might be a daft question, but if the Regulated actually means something when it occurs in the phrase "Credit Agreement Regulated by the Consumer Credit Act 1974" then if adherence to those regulations can be sidestepped by falling back on the common law it appears, to the layman, that those regulations are not worth the paper that they are printed on. Is that actually the case?

 

If a Credit Agreement states that the agreement can be terminated (and any outstanding balance must be payed), subject to the service of any notice required by law then, if such a notice is not properly served, in the manner prescribed by those regulations, doesn't that mean that the agreement has not, and cannot, be terminated in connection with the breach with which that default notice deals, without providing that completely valid Default notice?

 

I asked the same question yesterday and I have the same opinion as you.

Termination is being loosely used imo, if we are reverting back to common law then mistakes made by the creditor can be used as ground to invalidate the agreement anyhow. So if we are taking this to case, we should have 2 defence arguements, CCA and indeed common law!

[Peterbard]

Might be a daft question, but if the Regulated actually means something when it occurs in the phrase "Credit Agreement Regulated by the Consumer Credit Act 1974" then if adherence to those regulations can be sidestepped by falling back on the common law it appears, to the layman, that those regulations are not worth the paper that they are printed on. Is that actually the case?

 

If a Credit Agreement states that the agreement can be terminated (and any outstanding balance must be payed), subject to the service of any notice required by law then, if such a notice is not properly served, in the manner prescribed by those regulations, doesn't that mean that the agreement has not, and cannot, be terminated in connection with the breach with which that default notice deals, without providing that completely valid Default notice?

 

hi

 

If the creditor wishes to recover following a breach by the debtor then he must issue a default notice, after the statutory perid he can then enforce by issuing a termination.

THe act says nothing about termination in a none breach situation so it is left to the contract, most contain a sections that says something like we can terminate the contract at any time, they can do this bassially becayse there is nothing in the act that says they can't

This is currently rhe stuation, in February next year there are new sections being introduced into the act by the Eurpopean union that reqire the creditor to give notice if he is going to contracturally termnate the agreement and also give reasons forwhy he is doing it.

Edited October 4, 2010 by Dodgeball
spelling sucks

[chez262]

I think we would agree that these cases are unilateral mistakes in contract law. If this is so then one would want to prove it was a business error as opposed to a mechanical calculation as with an error in business judgment, there is no relief. However, with a mechanical calculation one would have to go on further to prove that you have not taken advantage of something that was clearly wrong to a reasonable person. If it is seen as being a clear mistake then the contract would be upheld.

 

I believe as a reasonable person, that a termination without any notice to recify the default would be deemed a business error and I would by no means think at the time that the creditor had done anything wrong therefore it can not be seen as taking advantage of something that is clearly a mistake.

 

I do not have any education on this matter however so please correct me if I'm wrong

[Peterbard]

What if the termination without a DN states it is due to a default on the account, this surely rules out s98?

I understand the theory around a faulty DN however if no DN is sent and a termination is made by the creditor on the grounds of a default, how can they un-terminate without re-signing paperwork? If they terminate, they end the agreement. If they disregard the legislation put in place and 'take' one of the benefits only owed to them if they follow suit then how can that be 'fixable' with a DN and another TN when the agreement in question has been wrongfully terminated.

If the claimants plead mistake is it not clear they have breached and therefore made grounds for invalidating the agreement??

 

Hi

 

A default termination must follow a breach if there is no default notice there can be no default termination in the eyes of the law, the termination would therefore be void, the account would be active.

 

peter

[Notasniceasjoe]

hi

 

If the creditor wishes to recover following a breach by the debtor then he must issue a default notice, after the statutory perid he can then enforce by issuing a termination.

Understood.

 

What if the creditor doesn't actually issue a termination, under those circumstances, but goes on to demand the full balance? That's one of the other options described by s87.

 

THe act says nothing about termination in a none breach situation so it is left to the contract, most contain a sections that says something like we can terminate the contract at any time, they can do this bassially becayse there is nothing in the act that says they can't

 

Yep, and those clauses also grant that same (or similar) basic termination right to the debtor also, albeit with different responsibilities and benefits.

 

Under those circumstances have not the regulations been essentially side-stepped, or at least attempted to be side-stepped?

 

 

 

 

 

This is currently rhe stuation, in February next year there are new sections being introduced into the act by the Eurpopean union that reqire the creditor to give notice if he is going to contracturally termnate the agreement and also give reasons forwhy he is doing it.

 

That won't apply retrospectively to existing agreements, will it?

[jayjay11]

So PB the only time they couldnt take action was between the 1st termination and the second and this DN and further TN would be valid in court? How about the folling taken from this site "principal of unlawful dn"

quote [4] The fiction of the Second DN and the Enduring Obligation

The service of any second default notice, at a time when the contract is terminated, owing to the wording of the DN in its prescribed form, would perpetuate the fiction that the contract endured. The same can be said owing to the provisions of section 89 of the Act.

 

The form of words in the DN incorporate text in order to meet the intention of section 89 of the Act which provides:

 

'If before the date specified for that purpose in the default notice the debtor or hirer takes the action specified under section 88(1)(b) or © the breach shall be treated as not having occurred.'

 

In other words, in serving the second DN, the creditor would be suggesting:

 

[a] an obligation had persisted post termination by which the debtor was bound to make instalment payments (ie post-termination 'arrears'), and

that if payment of those 'arrears' was made, an obligation to make future instalment payments would endure.

 

The obligations at [a] are obligations enduring during the currency of the agreement. Besides maintaining the fiction of the enduring agremeent as I say, it seems to me any second DN would be bound to be defective for over-stating the sums due. The creditor can not state as an amount due for 'arrears' of instalments that which he said in consequence of his termination was no longer due and payable by instalments. If the creditor sought to use a form of DN which made sense by getting round the fact the agreement had been terminated, the DN would not be in prescribed form.

 

The only way in which a second DN would be of value to the creditor would be where the contract had been re-instated. If the debtor has accepted the termination, re-instatement requires the consent of the debtor.

 

The net result of [1] to [4] is the agreement is terminated for all time. The creditor's remedy is now limited by section 87(1). All that is left for the creditor to recover is the sum truly in arrear at the date of the default notice.

 

 

[chez262]

Hi

 

A default termination must follow a breach if there is no default notice there can be no default termination in the eyes of the law, the termination would therefore be void, the account would be active.

 

peter

 

Thanks Peter,

I totally get your point here. However, does this not go back to the fact that the CCA is therefore a pointless legislation and is more a set of instructions?

Can it not be argued that yes there was no DN but there was indeed a termination and a default on the account. Just because the law says you can't do something does not mean it cannot be done surely?

The act says the benefits of a termination can only be eligible if a DN is present. The termination was actioned but without the DN therefore the benefit is ineligible to the creditor. He has surely disregarded the CCA in this case and this could be seen as prejudice to the debtor as well as being a wrongful termination.

I would be very surprised to see a DJ disregard a wrongful termination out of hand just because he made an error. This is injustice and basically tells everyone "the creditor can do what he wants and if he breaches legislation then it just won't stand".

Regards

C

[Peterbard]

Understood.

 

What if the creditor doesn't actually issue a termination, under those circumstances, but goes on to demand the full balance? That's one of the other options described by s87.

 

 

 

Yep, and those clauses also grant that same (or similar) basic termination right to the debtor also, albeit with different responsibilities and benefits.

 

Under those circumstances have not the regulations been essentially side-stepped, or at least attempted to be side-stepped?

 

Hi

 

I think perhaps you are right perhaps it is side stepping but that is the situation it seems to me that the european intervension is trying to rectify this by the inclusions of the sections mentioned i think the new requirements will be coming into force later in the year there is mention of trnsitional arrangements in the act but i would hae to lookit up it is available on Balii if you want to beat me to it.

Peter

[jayjay11]

This is the letter clearly states full balance demanded, and account closed so i would not have known how much would have to be paid in default as it wasnt even stated on the final demandhttp://

[Peterbard]

Thanks Peter,

I totally get your point here. However, does this not go back to the fact that the CCA is therefore a pointless legislation and is more a set of instructions?

Can it not be argued that yes there was no DN but there was indeed a termination and a default on the account. Just because the law says you can't do something does not mean it cannot be done surely?

The act says the benefits of a termination can only be eligible if a DN is present. The termination was actioned but without the DN therefore the benefit is ineligible to the creditor. He has surely disregarded the CCA in this case and this could be seen as prejudice to the debtor as well as being a wrongful termination.

I would be very surprised to see a DJ disregard a wrongful termination out of hand just because he made an error. This is injustice and basically tells everyone "the creditor can do what he wants and if he breaches legislation then it just won't stand".

Regards

C

Hi

Yes i think you are right the Dj would take a dim vieew of this but he would have to find a statute or law that was breached in order to take any action, there is no sanctionin the cca for incorrectly isuing a termination notice unfortunately, as i said earlier it would probably be an unfair act under section140 but this would be down to predjudice caused a possibility.

 

Peter

[Peterbard]

This is the letter clearly states full balance demanded, and account closed so i would not have known how much would have to be paid in default as it wasnt even stated on the final demandhttp://

 

Hi

Looks like your account has not been terminated yet, the default notice they mentioned here should have contained all detailos of the amount outstanding on your account if not it was invalid.

Peter

[jayjay11]

No default was sent and no note made on file either as i found out from my SAR also does acount cloesd and demand for full amount not termination they were not giving me any chance to make payments due in the future So is this not in breach of S87 and they are not entitled to benifit from the next stage ie enforcement

Edited October 4, 2010 by jayjay11
text added

[chez262]

Hi

Yes i think you are right the Dj would take a dim vieew of this but he would have to find a statute or law that was breached in order to take any action, there is no sanctionin the cca for incorrectly isuing a termination notice unfortunately, as i said earlier it would probably be an unfair act under section140 but this would be down to predjudice caused a possibility.

 

Peter

 

Thanks Peter, much appreciated.

 

May I just add that I think the view you take in this forum is invaluable to cagers as it is this they will come up against in the court room therefore this they have to defend, not the actual supposed wrong doing of a creditor which is indeed a technicality until proven otherwise 8)

 

Regards,

C

[Peterbard]

So PB the only time they couldnt take action was between the 1st termination and the second and this DN and further TN would be valid in court? How about the folling taken from this site "principal of unlawful dn"

quote [4] The fiction of the Second DN and the Enduring Obligation

The service of any second default notice, at a time when the contract is terminated, owing to the wording of the DN in its prescribed form, would perpetuate the fiction that the contract endured. The same can be said owing to the provisions of section 89 of the Act.

 

The form of words in the DN incorporate text in order to meet the intention of section 89 of the Act which provides:

 

'If before the date specified for that purpose in the default notice the debtor or hirer takes the action specified under section 88(1)(b) or © the breach shall be treated as not having occurred.'

 

In other words, in serving the second DN, the creditor would be suggesting:

 

[a] an obligation had persisted post termination by which the debtor was bound to make instalment payments (ie post-termination 'arrears'), and

that if payment of those 'arrears' was made, an obligation to make future instalment payments would endure.

 

The obligations at [a] are obligations enduring during the currency of the agreement. Besides maintaining the fiction of the enduring agremeent as I say, it seems to me any second DN would be bound to be defective for over-stating the sums due. The creditor can not state as an amount due for 'arrears' of instalments that which he said in consequence of his termination was no longer due and payable by instalments. If the creditor sought to use a form of DN which made sense by getting round the fact the agreement had been terminated, the DN would not be in prescribed form.

 

The only way in which a second DN would be of value to the creditor would be where the contract had been re-instated. If the debtor has accepted the termination, re-instatement requires the consent of the debtor.

 

The net result of [1] to [4] is the agreement is terminated for all time. The creditor's remedy is now limited by section 87(1). All that is left for the creditor to recover is the sum truly in arrear at the date of the default notice.

 

 

 

Hi

Yes i read surfaceagents excellent piece when he wrote it some time ago, the logic is sound although i always thought a little tenuous, at the time of writing i thnk it may have even had a slight chance of success, at least the part about not being able to accuratley calculate the sums due on the second notice, but a lot has happende since then the swain case brought up the concept of de minimus and the recent brendon case predjudice caused to the debtor, i do not believe this kind of legal rangling would work in a cc room today.

 

Peter

[Peterbard]

Thanks Peter, much appreciated.

 

May I just add that I think the view you take in this forum is invaluable to cagers as it is this they will come up against in the court room therefore this they have to defend, not the actual supposed wrong doing of a creditor which is indeed a technicality until proven otherwise 8)

 

Regards,

C

 

Appretiate it

 

Peter

[Peterbard]

No default was sent and no note made on file either as i found out from my SAR also does acount cloesd and demand for full amount not termination they were not giving me any chance to make payments due in the future So is this not in breach of S87 and they are not entitled to benifit from the next stage ie enforcement

 

HI

No they can terminate your right to draw down further credit without terminating your acount. Also there is nothing to stop them demanding full payment if they wish to pursue this through the court they would have to terminate.

 

But first they ned to send a default notice.

 

peter

[Notasniceasjoe]

HI

No they can terminate your right to draw down further credit without terminating your acount. Also there is nothing to stop them demanding full payment if they wish to pursue this through the court they would have to terminate.

 

But first they ned to send a default notice.

 

peter

 

Now I'm confused again.

 

Are you saying that the creditor does need a valid default notice, followed by a valid termination in order to demand the full balance and enforce it through the court?

[Peterbard]

Now I'm confused again.

 

Are you saying that the creditor does need a valid default notice, followed by a valid termination in order to demand the full balance and enforce it through the court?

Hi

Yes they can terminate your ability to draw creditand they can demand settlement anytime they like, if they wish to enforce through the court though they would have to have sent a valid defult, allowed time to emedy and then terminated the account

 

Peter

Edited October 4, 2010 by Dodgeball
Doh

[Notasniceasjoe]

Hi

Yes they can terminate your ability to draw creditand they can demand settlement anytime they like, if they wish to enforce through the court though they would have to have sent a valid defult, allowed time to emedy and then terminated the account

 

Peter

 

Thanks

 

..ank thanks for making folks think about this issue in real depth. It's all too easy to regard such things as a defective DN as being a silver bullet and, so often, it turns out to be considerably more complicated and less certain.

[gh2008]

There is no loophole here trminationn af an agreement can be made at any time by either party so there is no such thng as unlawful termination.

 

A default termination cannot be isseued on a incorrect default if it couold it would not be a default temrination. A contractural termination or a section 98 will be a termination to draw credit usually and even if it is a full termianation, it is not a temination on breach of the act, it is the breach that makes the default actionable not the temination.

 

Again, Peter I agree with you. There is no such thing as unlawful termination as long as the notice period is correct etc.

I also agree that they can terminate at any time

 

What I do not agree with is that if they terminate and then, for whatever reason, they made a mistake and didn't really mean it - they are NOT permitted to then unilaterally re-instate the agreement.

[Peterbard]

Again, Peter I agree with you. There is no such thing as unlawful termination as long as the notice period is correct etc.

I also agree that they can terminate at any time

 

What I do not agree with is that if they terminate and then, for whatever reason, they made a mistake and didn't really mean it - they are NOT permitted to then unilaterally re-instate the agreement.

 

Hi

what a boring place it would be if we all agreed with each other all the time.

 

I agree that the agreement could not be unilaterally reinstated, my point is that the agreement was never terminated in the first place if the DN was defective. The section says before the creditor can therefore if ther is no valid default he cannot.

 

The language of the CCA is very exact as i am sure you know, if it meant the creditor must not it would have said so, then there would have been sanction for breach, as it is the section means that the action of termination cannot take place without a valid default.

 

Peter

Edited October 4, 2010 by Dodgeball
bit of puctuation needed

[chez262]

Hi

what a boring place it would be if we all agreed with each other all the time.

 

I agree that the agreement could not be unilaterally reinstated, my point is that the agreement was never terminated in the first place if the DN was defective. The section says before the creditor can therefore if ther is no valid default he cannot.

 

The language of the CCA is very exact as i am sure you know, if it meant the creditor must not it would have said so, then there would have been sanction for breach, as it is the section means that the action of termination cannot take place without a valid default.

 

Peter

 

This is a real strange one and I fully concur with what PB is stating however I favour gh2008 on this one in that even though the CCA does state the DN is required before the termination, I do not believe that the termination can just be ignored as never happened or be made void.

In the event that it is disresgarded in court, DJ's are judging these cases on prejudice anyhow and I think it is extremely prejudice of the creditor to issue full demands and threats of court action when they are persuing this action through an entitlement they are not entitled to, yet, if PB's case is to stand.

Regards,

C

[Peterbard]

Hi

Yes I would like to agree with you on this, but I cannot the feedback that I am getting from what creditors and solicitor are saying both on here and other forums that I contribute to seems to be consistent with the view I have stated.

It may be that creditors are trying it on and sooner or later a judge will saying oh no you don’t and a faulty default and termination will mean no further action can be taken.

 

Please realise that to some extent I am playing devils advocate here.

 

Standing back from the technicalities of the legislation think about what that would mean.

If the default was faulty the creditor would effectively not be able to enforce the agreement.

Ring any bells ? I am sure it does for most of us on here section127(3) has been the mainstay of claims for unenforceability for some years, Many of us have struggled over the past few years to make the various county courts up and down the land swallow this regulation.

 

My point is that section 127(3) is really quite unequivocal “the creditor cannot enforce”. and even then, what convoluted means the courts go to in order to get out of finding for the debtor, I have had judges pass totally illegible agreements as compliant, the act says that if an agreement is not properly executed in any way it is only enforceable by an order of the court yet has anyone ever heard of an enforcement order being refused when challenged only under 65.

Certainly the only real success I have had is when the prescribed terms have been there and I have been able to prove them incorrect with my calculator and even then it has been touch and go.

 

The Wilson case went all the way to the Lords because the judiciary didn’t want to find for the debtor and even then they had section127(3-5)repealed so it would not happen again.

 

An agreement has to be correct at execution otherwise the resulting deal is fraudulent it cannot be undone simply by issuing a new agreement. Yet still courts enforce.

Forgive me for waffling but I hope you see what I mean, what you are saying is; the creditor would not be unable to enforce on nothing more than what could be a typo on the default notice.

Believe me if I thought this was a goer I would be all over it.

Peter

Edited October 4, 2010 by Dodgeball
Trying to translate to english