Miss Muppet v MBNA - *** WON + COSTS ***

[miss muppet]

Hi all, ok, on with the continuing saga:

 

With Slick's assistance this is a copy of the letter I sent to MBNA:

 

Thank you for your letter of xxxxx

 

In view of your client's wish to discontinue the claim I am writing to seek confirmation that any adverse data concerning this account will now be removed from the credit reference agency files. I also seek confirmation that the account balance will be written down to zero.

 

If your client agrees to the above conditions I will require confirmation in writing by return before my agreement to discontinue my defence of your client's claim. If the agreement is not forthcoming I will continue and seek costs and compensation.

 

I look forward to your prompt reply so that this matter may be finally be settled amicably in the interest of both parties.

 

Their reply was received to-day along with a notice of discontuance which they have filed with court (they tell me)curiously it says at the top (Note:

Where another party must consent to the proceedings being discontinued, a copy of their consent much be attached to and served with this form.

 

Anyway this is a copy of their letter:

 

I write further to your letter of xxxxx

 

I have discussed this matter with my client and as such they have confirmed that they are unable to remove any adverse data from the credit reference agency files because they have signed up to the Rules of Reciprocity.

 

The Principles of Reciprocity (POR) cover the supply and access of consumer credit performance data concerning parties located in the UK as well as the recording rules on credit search footprints, shared through credit reference agencies. The 'Governing' Principle states that data is shared only for the prevention of over-commitment,bad debt, fraud and money laundering and to support debt recovery and debtor tracing with the aim of promoting responsible lending.

 

Further they have confirmed that the account balance will not be written down to zero.

 

I have noted that you have stated in your letter you will be seeking costs and compensation should the terms stated in your letter not be agreed to. The debt in relation to this claim is outstanding and you are liable to pay this amount. However my client has taken the commercial decision at this stage to bring these proceedings to an end, in order to save any further costs incurring, given the amount that is in dispute.

 

Please find enclosed for your attention a copy of the notice of discontinuance that I have today filed at Tamworth County Court.

 

Upon receipt of the notice of discontinuance, the court proceedings will end and there will be no court hearing on xxxxxx

 

Well, its a win anyway and I haven't finished with them yet, I shall be doing a report to the OFT in accordance with the quote from Susan Edwards, posted on site and I shall let the FOS deal with the issue of PPI, no more Mrs nice woman - he he!!

[miss muppet]

By the way, I should add to this that just in case our heroes are being economical with the truth about discontinuing I have made sure I have sent all copies of their and my paperwork in to court!

[citizenB]

By the way, I should add to this that just in case our heroes are being economical with the truth about discontinuing I have made sure I have sent all copies of their and my paperwork in to court!

 

We learn fast on CAG :grin:

[miss muppet]

Got a letter from court to-day that they have been notified that this case has been discontinued and hearing in September cancelled.

[citizenB]

Got a letter from court to-day that they have been notified that this case has been discontinued and hearing in September cancelled.

 

 

Excellent:D

[Gazza112]

Well done excellent news

[slick132]

Great news.

 

Are you going to leave the matters of default removal and debt write-off.

[Rhia]

Good stuff - subbing

[underdog13]

Congratulations MM:)

[miss muppet]

Thanks everyone. What do you think are my chances of success Slick bearing in mind their attitude? I know that Finlander is in an epic battle but is there anyone else whose thread you could point me to?

[slick132]

Hi MM,

 

Re chances of success on default removal and debt write-down, I'm not sure but will seek guidance on this.

 

I would think that this should be possible if there's no credit agreement, or at least an enforceable one.

 

We'll come back on this..........

[Rhia]

Having seen a lot of others experiences with the CRAs it's not and easy task but I would try and get MBNA to remove the default first. After all if their case is poor they had to discontinue then they should not be writing anything on your credit report. Knowing them they will play silly buggers.

 

Another ploy could be to write to each CRA and send copies of the discontinuance and state that MBNA did not have a properly executed agreement and therefore should not be processing your personal data. If they refuse you could either a)report to ICO (not sure of what this would do but I would do it anyway) or b)start court action against MBNA and/or the CRAs - they would all back off I think but it is pointing towards an epic struggle.

However, try writing letters first and see what happens. It's worth a shot.

Edited June 30, 2009 by Rhia

[slick132]

Agreed Rhia, and I hope to come back with advice on the best course of action.

 

I'm also concerned that the Discontinuance is not a final end to proceedings on the account. It could be pursued for collection regardless of the NoD or sold on to another DCA to start collection activity all over again.

[miss muppet]

Thanks guys very much for the advice, that is very much what I thought - the last point Slick is what I am concerned about and why I think I will have to make a sharpish complaint to OFT re pursuing when they know they do not have agreement - of course they knew this, thats why they discontinued, I was rather hoping the Judge would beat them to it and strike out the claim first but he/she was on their hols!!

[slick132]

Hi MM,

 

There's been some discussion about your case and the concensus is that you should agree to the discontinuance and notify the court accordingly.

 

Complain to the ICO about the negative CRA entries in respect of the alleged debt, on the basis that there's no enforceable Credit Agreement and this is a breach of the DP Act.

 

Write to the CRA's insisting that the negative entries be removed as there is no Credit Agreement and confirm that you're making a formal complaint to the ICO. Give them 14 days to reply in writing.

 

Credit for this goes to Martin3030, Caro and Car2403 on the site team.

[miss muppet]

http://www.consumeractiongroup.co.uk/forum/show-post/post-2247845.html

 

Hi Slick, do I still need to let the court know that I agree to the discontinuance despite their letter advising me that it has been discontinued?

 

Thanks all those mentioned for the advice on my next course of action, plenty of things to be getting on with there but first a pleasant interlude at Wimbledon on Sunday to look forward to - cheers m'dears!

[slick132]

It would be polite to drop the court a line to confirm your agreement to the discontinuance of the case.

 

[miss muppet]

Oh dear, knuckles duly rapped:)

[banker_rhymes_with]

Hello Miss Muppet!

 

This may be of use, it's the OFT letter above, but in Text Format, so people can Copy/Paste anything they need:

 

THE CONSUMER CREDIT ACT 1974 - Sections 77 and 78

Summary

On request and when accompanied by £1, a consumer has the right to:

• a copy of their executed agreement

• any other document referred to in it

• a statement showing

- the total sum paid under the agreement by the debtor

- the total sum which has become payable under the agreement by the debtor but remains unpaid, and the various amounts comprised in that total sum, with the date when each became due, and

- the total sum which is to become payable under the agreement by the debtor, and the various amounts comprised in that total sum, with the date, or mode of determining the date, when each becomes due. If the creditor is unable to give this information, he can state instead how the dates and amounts fall to be ascertained.

The copy of the executed agreement need not be an exact copy but it must be a ‘true copy’ and not some reconstruction of what the original might have been and it must contain the same terms as the original. Where the terms have been varied as provided for within the agreement, the copy of the original agreement must be accompanied by a document setting out the current terms, as varied. Certain details may be omitted from the original agreement eg the signature but the debtor must be in no doubt as to the true nature of his obligations under the loan.

Should no original agreement be in existence it is very hard to say that the copy the creditor offers to the debtor is, in fact, a true copy as there would be no original with which to compare it. In our view the onus of proof would be on the creditor to show that the copy is a true one and where none existed he may have difficulty discharging this. Neither should creditors suggest that a consumer has signed a credit agreement where they are unable to provide evidence to support this — to do so is likely to be a misleading action under Regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) and would also constitute an unfair or improper business practice.

In our view a debt collector who has bought the debt is the ‘creditor’ and as such takes on the liabilities of section 77.

Under section 77(4), if the creditor is unable to provide this information, he is not entitled to enforce the debt while he remains in default (Decriminalised from 26 May 2008 on the coming into force of the CPRs).

Legal Argument

A copy of the executed agreement

 

Under the prescribed condition, section 77 of the Act requires the debtor to (Typo, she means Creditor I think) ‘...give the debtor a copy of the executed agreement (if any)....‘. The ‘if any’ most naturally refers to the exception for agreements older than 1985 (Not sure this is correct, "if any" was inserted to cover Verbal Agreements).

Where a creditor receives a request to supply a copy of the executed agreement, the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 (‘1983 regs’) apply. Regulation 3(1) sets out the basic position that ‘every copy of an executed agreement... shall be a true copy’.

Regulation 3(2) goes on to concede that there may be omitted from this true copy various information such as details which are not required to be in the agreement by law: the signature box, signature (it should be noted that sub-ss 3-5 of section 127 do not apply to agreements entered into after 1 April 2007.A Court may then, for example, enforce unsigned agreements if it considers it is just to do so.) and date of signature. In our view the effect of Regulation 3(2) is that the creditor is only obliged to send out a generic copy of the agreement the debtor has signed up to. The creditor is not obliged to make an actual photocopy of the agreement.

However, the copy does have to be a ‘true copy’. This is a technical term, which has been discussed in a number of cases, mostly relating to bills of sale and the need to register a ‘true copy’ of the bill with the High Court. These cases come from the days before typewriters, when copies were made by hand. The consequences of filing a copy which was not a true copy were severe, since the bill would then be void and the creditor deprived of his security.

Meaning of ‘true copy’

 

In this context, the courts decided that a ‘true copy’ need not necessarily be an ‘exact copy,’ but it must be ‘so true that nobody reading it can by any possibility misunderstand it’ or be misled by it (In re Hewer ex parte Kahen (1882) LR 21 Ch.D. 871 at 875). The copy must contain ‘every material provision which is contained in the original’ (except that if the defect is made good by reading the document as a whole, the omission will not be fatal) (Court of Appeal in Burchell v Thompson [1920] 2 KB 80 at 98-99). Further, it is not sufficient for the copy merely ‘to state with complete accuracy in a summary form the effect of the stipulations contained in the original. It is not merely a document that is to state the true legal effect of the original; it is to be a copy of the original’ (per Atkin LJ in Burchell at 105).

Hewer, ex parte Kahen - the filed copy of the bill omitted the precise day of the month on which payment was to be made. The court held this was trivial, and no debtor would be misled by it.

Sharp v McHenry (1888 ) LR 38 Ch.D. 427- the copy contained blanks which were not in the original. The court decided that the blanks were unimportant, since the omitted words were not required for the original bill to be valid.

Burchell v Thompson [1920] 2 KB 80 - the copy failed to include the words ‘per annum’ after the interest rate of 55%. The reader of the copy would have to guess whether the interest was per annum, per month or something else but as one could sensibly assume, correctly, that it was per annum it was a true copy.

Commercial Credit Company of Canada Ltd v Fuiton [1923] AC 798 - suggested further that where there are a raft of smaller differences in a bill of exchange copy, this could prevent it being a true copy. However where the differences were such as to make the copy contract actually different to the original, the copy will not be true. Lord Sumner, speaking of the man who may wish to refer to the copy, concluded that ‘the Act promises him ... a true copy, not a puzzle. He is to inspect it, not to recover the original by a process of conjectural emendation’ (at 807).

Terms and Conditions

 

Regulation 7(1) of the 1983 Regs requires that a requested copy of an agreement which has been unilaterally varied under section 82(1) of the Act, shall be accompanied either by the latest notice of variation or a copy of the terms and conditions as varied. Regulation 7(2) extends the principle to copies of varied securities supplied either to the consumer or the surety.

Debt collectors as creditors

A consumer credit debt can be assigned in two ways: in law under the Law of Property Act 1925 or in equity but in practice we need to be concerned only with statutory assignments.

For a debt to be assigned in law, there are three conditions:

• the assignment must be absolute.

• the assignor must make the assignment in writing.

• express notice of the assignment must be given in writing to the debtor (see section 136 of the Law of Property Act 1925).

 

The reason the debt is assigned is immaterial. For instance, books of loans may be sold on to be collected as an asset rather than as a discounted debt.

In some instances, the debt collector may have purchased a debt but not have the relevant agreement. Whilst, in general, ‘liabilities’ cannot be assigned there must be a question mark over whether ‘duties’ are the same. This is important since there is a rule, expressed in Tito v Waddell (No 2) [1977] Ch 106 at 289 to 302, that where a benefit is conditional upon some burden, the assignee must also take the burden. An example is where the contractor has the right to mine on condition that they pay compensation to those disrupted by the mining. If they assign their right to mine, the assignee takes this right subject to the duty to pay compensation.

Therefore, there is a strong argument that under the Act, the right to payment is never absolute. It is always subject to duties (many of which are imposed under the Act). For instance, the right to enforce the credit agreement at all is subject to the duty to comply with section 77 or 78. This duty is not a ‘liability’ as such under the credit agreement but is a condition of the right to repayment.

 

There has been a suggestion that debt collectors can avoid complying with section 77 and 78 by claiming that the agreement is no longer `live’ in some way as it has been ‘terminated’ based on section 103 of the Act. This talks of a ‘trader’ who was the creditor under a regulated agreement, implying that ‘trader’ is no longer a creditor once an agreement is ended. Section 103, however, deals with where the customer no longer owes any money at all and therefore it is correct to say that he is no longer a debtor and the trader is no longer his creditor. Where money is still owed, section 103 would not apply, since the consumer would not be entitled to a termination statement.

The first issue on when the debt collector becomes the creditor is relatively simple. Section 189(1) of the Act defines ‘creditor’ as ‘the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law.’

 

Where the debt collector is not acting as the creditor’s agent, or otherwise on his behalf, the only legal basis he can have for demanding payment from the debtor is if the creditor’s rights and duties have been assigned to him. Therefore we can be reasonably confident that a debt collector who has bought the debt is the ‘creditor’.

 

Unpalatable though section 77 and 78 may be for some creditors, if the debt collector is unable to prove the debt, they should be more careful about the debts they buy. They cannot complain that the sections are somehow unfair as it is in the Act and so must be complied with. It is up to them to ensure they purchase and maintain sufficient records to be able to prove the debt and comply with the other requirements of the Act.

 

Misleading statements to debtors

 

Sections 77 and 78 refer to supplying a copy of the ‘executed’ agreement within 12 working days of receiving a written request from the debtor. Failure to do so makes the agreement unenforceable against the debtor until a copy is provided. In addition, if the default continues for a period of 1 month the creditor is in breach of the Act.

Execution involves signing the agreement. If no agreement has been executed, it is impossible to supply a true copy of the agreement. Should a creditor supply a copy agreement, even though the debtor has never signed any agreement with that creditor, no indication should be given that it is a true copy or a copy of an executed agreement. To do so may contravene Regulation 5 of the CPRs and be an unfair or improper business practice.

 

The consequence of the debtor not having signed a credit agreement with the creditor is that the agreement is unenforceable except where the court orders that enforcement may take place. Where the agreement was made before 6th April 2007 the court is not able to make such an order unless the agreement was signed by the debtor.

 

Therefore it is misleading to state, when complying with a section 77 or 78 request, that the debtor has signed or would have signed (or similar) the enclosed agreement where the debtor has not done so. From 26 May 2008 such a statement will be a breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Regulation 5 of the CPRs states that a commercial practice is a misleading action if it contains false information in relation to the main characteristics of the product (amongst other matters) and is likely therefore to cause the average consumer to take a transactional decision he would not have taken otherwise. The product in question is the credit agreement and the main characteristics include the ‘execution of the product’ (Regulation 5(5)(d) of the CPRs).

Telling a consumer that he signed such an agreement is also a misleading statement about his rights and the risks he might face as covered by Regulation 5(4)(k) of the CPRs. It is our view that it is likely that a consumer will take a transactional decision to make a payment under the credit agreement or to refrain from exercising his rights under the agreement as a result of being misled about whether he signed it.

 

Breach of Regulation 5 of the CPRs is a criminal offence under Regulation 9 and can also be enforced under Part 8 of the Enterprise Act 2002. Under section 218A of the Enterprise Act, where an application for an Enforcement Order is made the court may require the Respondent ‘to provide evidence of the accuracy of any factual claim’ (such as a claim that a debtor has signed a credit agreement).

In addition, it should be noted that threats to take action that cannot be taken is listed as one of the factors that will be considered in assessing aggressive practices in Regulation 7(2) of the CPRs.

May 2008

 

Susan Edwards

Head of Credit Investigations and Enforcement, Office of Fair Trading

Cheers,

BRW

Edited July 7, 2009 by banker_rhymes_with
Typo. Clarifications in Red.

[miss muppet]

Good Show BRW, thats brilliant!