Invalid Default Notices

[MandM]

 

I have since made token payments of around £200 to the DCA - leaving a current balance of £9800. I therefore have not even paid off the arrears at the time of the dodgy DN and TN - so surely my subsequent ongoing token payments to a 3rd party can't prevent me from now claiming unlawful rescission and offerring the balance of the arrears in F&F?

 

 

BD

 

Just done something similar with Eggs Sols. They started proceedings last July, and being a good chap, I continued to pay my previously suggested 'token amount'. Then a few weeks back I stumbled on the theories being discussed.

 

Since then, i've searched my paperwork and found my letter accepting the unlawful termination last July.

 

Have stopped payment and written to the Sols saying that as I have now been paying off the "arrears" since last July (at a higher than comfortable rate) I would like them to seek a lower amount from their client and an update on the balance status of the arrears - and only the arrears - as, due to their unlawful termination last year (copy of last years letter to your client enclosed) that is, of course, all they are due.

 

The point there is that the amount I have paid them is still well short of the total arrears outstanding so in my view I see no problem.

 

M

[welshperson3]

hi bigdebter

 

this is just my view on your situation and hopefully others might add to this view

 

first you say that you never received the original DN, it is my view that they don't have to prove that it was sent they only have to say it was sent, and if it has not been returned to sender then it is deemed served.

 

so on the above rule would no doubt be the same for when you sent your acceptance of The unlawfull termination.I'm sure i have seen a copy of the letter that you sent a long time ago on here some were.

 

now that only leaves the arrears to pay witch you have been paying monthly but now think that they are about all paid,

 

so you should send them a letter requesting how much of the arrears are left to pay, and also a copy of your original acceptance letter with the date that you sent it just in case they didn't get the original.then when you finish paying the arrears that were stated in the original DN this should be all over.

 

wp3

[Jim Pike]

Hi all

Could you good people take a look at my thread in the intelligent finance section

 

CCA'd, DEFAULTED, TERMINATED. HOUNDED BY BLAIR WITCH

 

sorry I dont know how to put a clickable link in to the thread,

Any help will be happily received.

Thanks

Jim

[Bigdebtor]

Hi welsh

 

I had forgotten I had sent that letter off within a few days of the dodgy DN! I am pretty sure I will be able to find it in my "relevant filing system" (or "reconstitute a true copy" to use the creditor's parlance and practice).

 

Also I have just noticed the card no on the letters from the DCA differ from the OC's card no. - so I may well have been paying off someone else's balance over the last 2 years! I don't know how it grew from £9.5k to £10 k anyway after it was supposed to be terminated - so that could well be an explanation!

 

Either way I think there is a get out of jail card available to me in this.

 

If so - this thread has been a godsend - worth losing most of yesterday reading it from cover to cover - and I am going to tip your scales for your help as I have already done to several others yesterday and today.

 

BD

[vint1954]

I have sent my letter off accepting the banks unlawful rescission. But still have no idea whether it has any chance. My overdraft was subject to review and because I had exceeded its limit , the bank withdrew the facility. My arrears suddenly jumped from £170 to £1170. BUT they issued a DN for the whole amount the day before the review letter stated was the date the overdraft was ending. So a faulty DN (only 14 days and asking for all the money).

 

The account is with the courts at the moment (I had a judgement which was set aside so the bank could defend). I am guessing that they cannot issue another DN or TN if the account is in such dispute.

Hi IW,

 

Overdrafts do not come under CCA 1974.

 

No, they cannot reissue TN or DN once court action has started.

[vint1954]

Sorry to be hijacking Pinky's thread a bit - but I have just checked my paperwork and note the amount I was in arrears when the DN and TN were issued was around £500 - on a balance which then stood at around £9500.

 

The amount "assigned" to a DCA a year or so later was just over £10k - presumably other charges applied by the OC but never notified to me? How can they do this after terminating the account?

 

I have since made token payments of around £200 to the DCA - leaving a current balance of £9800. I therefore have not even paid off the arrears at the time of the dodgy DN and TN - so surely my subsequent ongoing token payments to a 3rd party can't prevent me from now claiming unlawful rescission and offerring the balance of the arrears in F&F?

 

Please someone - do a Clint Eastwood and make my day in this?

 

BD

If bigdebtor and M have just stumbled on their letters, accepting rescission, between the date of termination and the next payment made, then as an unsofisticated debtor, you may have felt obliged to offer a token payment, due to the emense harrassment from the creditor. Unfortunately, the monies paid would have to have been deemed a gift.

[vint1954]

hi bigdebter

 

this is just my view on your situation and hopefully others might add to this view

 

first you say that you never received the original DN, it is my view that they don't have to prove that it was sent they only have to say it was sent, and if it has not been returned to sender then it is deemed served.

 

so on the above rule would no doubt be the same for when you sent your acceptance of The unlawfull termination.I'm sure i have seen a copy of the letter that you sent a long time ago on here some were.

 

now that only leaves the arrears to pay witch you have been paying monthly but now think that they are about all paid,

 

Sum already paid towards arrears, but have you decided what compensation may be due to you for unlawful rescission.

 

so you should send them a letter requesting how much of the arrears are left to pay, and also a copy of your original acceptance letter with the date that you sent it just in case they didn't get the original.then when you finish paying the arrears that were stated in the original DN this should be all over.

 

wp3

That would need to be a carefully crafted letter, taking great notice of the dates involved.

[vint1954]

Hi welsh

 

I had forgotten I had sent that letter off within a few days of the dodgy DN! I am pretty sure I will be able to find it in my "relevant filing system" (or "reconstitute a true copy" to use the creditor's parlance and practice).

 

No, no, no, no! It would have been just after the TERMINATION! It may have looked like this.

Date xxxxxxxxxxxx.

 

Dear Sir/Madam

 

Re account no xxxxxxxxxxxxxxxxxxx Unlawful Rescission.

 

With reference to the alleged debt to your company, I refer to your Default Notice dated xxxxxxxxx 2009, posted second class and received by me on xxxxxxxx 2009, and your subsequent actions in which you unlawfully repudiate the agreement It is clear from your actions that your intent is to no longer perform therefore I accept your unlawful rescission of the agreement and consider myself relieved from any obligations in respect of this agreement .

 

[i note that you are now entitled to claim those arrears genuinely due at the time of the termination (not including any unlawful charges ) and i would be obliged if you would advise me of the exact amount of those arrears, against which may be a claim for unlawful rescission[/font]

 

I look forward to hearing from you.

 

Yours faithfully

 

 

Also I have just noticed the card no on the letters from the DCA differ from the OC's card no. - so I may well have been paying off someone else's balance over the last 2 years! I don't know how it grew from £9.5k to £10 k anyway after it was supposed to be terminated - so that could well be an explanation!

 

Either way I think there is a get out of jail card available to me in this.

 

If so - this thread has been a godsend - worth losing most of yesterday reading it from cover to cover - and I am going to tip your scales for your help as I have already done to several others yesterday and today.

 

Then thank Pinky

 

BD

Vint

[MandM]

If bigdebtor and M have just stumbled on their letters, accepting rescission, between the date of termination and the next payment made, then as an unsofisticated debtor, you may have felt obliged to offer a token payment, due to the emense harrassment from the creditor. Unfortunately, the monies paid would have to have been deemed a gift.

 

Thanks Vint,

 

So unless a court says otherwise, I can pay them no more.

 

M

[vint1954]

Thanks Vint,

 

So unless a court says otherwise, I can pay them no more.

 

M

Try writing to them, saying

 

Following your unlawfull rescission of the above agreement, accepted by me in writing xxxxxxxxxxxxxx, I have been making payments to yourselves against the lawful arrears due at that time.

 

Could you please supply me with a statement of outstanding lawful arrears, as mentioned in your unlawful Default Notice dated xxxxxxxxx, less any unlawful penalty charges and interest applied.

 

At this stage, I am undecided as to the level of compensation required frm you for this ulawful rescission however, I anm sure that we can come to an amicable arrangement.

 

Yours

[BornAgainBiker]

can anyone tell me how i can direct a freind cagger to this thread, i have'nt a clue. thanks.

[vint1954]

can anyone tell me how i can direct a freind cagger to this thread, i have'nt a clue. thanks.

Right click this link and copy then paste.

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/196312-invalid-default-notices-47.html#post2713823

[MandM]

Try writing to them, saying

 

Following your unlawfull rescission of the above agreement, accepted by me in writing xxxxxxxxxxxxxx, I have been making payments to yourselves against the lawful arrears due at that time.

 

Could you please supply me with a statement of outstanding lawful arrears, as mentioned in your unlawful Default Notice dated xxxxxxxxx, less any unlawful penalty charges and interest applied.

 

At this stage, I am undecided as to the level of compensation required frm you for this ulawful rescission however, I anm sure that we can come to an amicable arrangement.

 

Yours

 

Helpful as ever, cheers Vint, appreciated.

 

M

[diddydicky]

Pinky

 

As the venerable founder of this thread - which took up several (fascinating) hours of my life yesterday - can I ask if you (or any other well-informed cagger) would be good enough to confirm or correct my summary of understanding as below?

 

1. If you get a dodgy DN it can be corrected by the creditor any time UP TO TERMINATION.

2. If THEY send a termination notice based on you not complying with the requirements of a dodgy DN then the termination IS NOT VALID UNLESS YOU accept it in writing. They can still issue a further correct DN.

3. If you continue to make ANY further payments (even if lower than stated minimum) then you can be deemed to accept the agreement did not terminate despite the TN being issued.

4. To ensure termination is valid the debtor MUST accept it - and any arrears accruing up until this acceptance are still due - so the earlier it is accepted the better.

 

Is the above correct?

 

What about the case where you did not get the original DN and therefore don't know if it was dodgy?

 

I have one account where I note I have been charged for a default notice being issued - but did not get it - but got a TN and then I was told about a year letter the debt had been assigned. I was threatened with court action for the entire balance (but no further interest or charges had been added in the interim) which they demanded be paid in one go and then agreed further small monthly payments via CCCS together with freezing of interest.

 

If I do an SAR and the DN is supplied and proves to be faulty - can I NOW accept termination - based on only now getting the DN and discovering it was dodgy?

 

If so then can I now claim unlawful rescission and a refund of anything paid in excess of the arrears at time of DN?

 

Also what is deemed to be "arrears" if a new lower payment arrangement is agreed (like via CCCS)?

 

I am not too bothered about reclaiming any overpayment beyond the arrears as they stood - just getting the remaining current balance written off and the account marked as satisfied in full.

 

BD

 

you are almost there

 

you cannot make a DN "valid " by accepting an unlawful one

[diddydicky]

read and re read it until you understand

 

 

 

 

 

 

 

 

The contention advanced by ABC's lawyers was that if the DN was ineffective, the termination which ABC subsequently brought about in reliance upon that ineffective DN, was itself ineffective. In support, ABC said that since the law did not permit a creditor to terminate an agreement unless there had been service upon a debtor of an effective DN, by extension therefore, rather than having been terminated, the agreement endured.*

 

 

 

The law in support of this proposition was Consumer Credit Act 1974 section 87(1)(a) which says:

 

(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default notice ”) is necessary before the creditor or owner can become entitled, by reason of any breach by the debtor or hirer of a regulated agreement (a) to terminate the agreement

 

ABC went on to say that owing to the agreement enduring, ABC were therefore at liberty to serve a second DN.

 

At first blush, that looks quite a convincing argument. The Act itself forbids the creditor the right to terminate save in certain circumstances. So if the required circumstances were not present, how could the law regard the agreement as having terminated?

 

[1] Termination of a Contract and General Principles

A good place to start would be to dispel the myth that the law will not tolerate contract breaking. On the contrary whilst not actively encouraging it, the law will tolerate it. The courts will rarely impose upon one party an obligation to perform under a contract against its will, to do what it failed to do or redo what it tried and failed to do. Instead, what the law will do is on the one hand restrain the contract breaker from procuring the benefits it would have enjoyed had it fulfilled its contractual obligations and on the other, enable the injured party to recover damages flowing from the breach.

 

In*Golden Strait Corporation v Nippon Yusen Kubishka Kaisha*[2007], Lord Bingham said:

 

'The repudiation of a contract by one party ("the repudiator"), if accepted by the other ("the injured party"), brings the contract to an end and releases both parties from their primary obligations under the contract. The injured party is thereupon entitled to recover damages against the repudiator to compensate him for such financial loss as the repudiator's breach has caused him to suffer. This is elementary law.

 

The damages recoverable by the injured party are such sum as will put him in the same financial position as if the contract had been performed.'

 

What's more, the law will not merrily award whatever loss the injured party says he suffered. The court will require the injured party to prove his loss and further, will expect the injured party to take steps to mitigate the loss.*

 

'An injured party such as the owners may not, generally speaking, recover damages against a repudiator such as the charterers for loss which he could reasonably have avoided by taking reasonable commercial steps to mitigate his loss.'*[Lord Bingham in Golden Strait Corporation.]

 

Further still, in assessing damages the law will not even award what the parties may at formation of the agreement have agreed should be payable as liquidated damages in the event of breach. The court will not permit the recovery of liquidated damages unless the damages represent a fair pre-estimate of what loss might flow from the breach. If the liquidated damages are shown to be excessive and unrepresentative of the sactual loss suffered the law will readily declare the liquidated damages as a penalty and unenforceable.

 

In short, not only does the law tolerate contract breaking, but also, it will not tolerate the injured party taking advantage of the wrongdoer. The law does not pounce on the contract breaker to teach him a lesson. The court only awards the innocent party what damages truly flow from the breach. That admits of the possibility that a contract breaker can get away with it. If the injured party is unable to show resulting loss, the injured party may get nothing.

 

'One must look at the contract as a whole, and if it is clear that the innocent party has lost nothing, he should recover no more than nominal damages for the loss of his right to have the whole contract completed.'*[Edmund Davies LJ in*'The Mihalis Angelos'*(1971)]

 

[2] Termination in Non-Conformity with section 87.

The contention I advance is that an ineffective DN does not prohibit the creditor from terminating the agreement. Termination after service of an effective default notice is lawful termination, but as we have seen, a party may still terminate an agreement and be in the wrong for doing so. The law operates on a wrongful termination to offer to the injured party the choice of accepting the termination or to hold the contract breaker to his promise.

 

In the world of consumer credit, I contend a termination of the agreement by a creditor in terms whereby he announced he would no longer permit the debtor time to repay the credit, was a creditor in repudiatory breach of the agreement, unless in leading up to termination, the creditor complied with the requirements of the Act in circumstances where the debtor was in first breach of the agreement.

 

Further, and it is worth remembering, the Act is an Act for the purpose of consumer protection. The purpose of the Act is not to preserve the rights of creditors in contracts and to protect them from misadventure where for example, they terminated an agreement where it subsequently transpired the termination had not been in their interests. If that were so, the Act would have been an Act for the better protection of financiers.*

 

In a proper case, the law will come to the aid of the vulnerable to protect them from the consequences of their contracts (for example the unsound in mind, children, those under duress or undue influence). To suggest financiers fell into that bracket and the Consumer Credit Act*

operated to protect them and not the consumer, was absurd. The civil law does not come to rescue the misadentures of the sain and the savvy.

 

The clue to the position of the creditor on termination is in the use of the word 'entitled' in section 87(1). 'Entitled' connotes a right or a benefit. The Act therefore confers rights, conditional upon the provisions of section 87(1) being fuilfilled. Fail to fulfill the condition and the entitlements do not become available.*

 

In the case of a contract entered into by a person under duress and who then breaks the contract the law will come to that person's aid by recognising that person's plea that the contract was made under duress. If that person seeks a declaration of the court that the contract was made under duress the court wil readily declare the contract void.

 

If the Act had intended that a creditor's termination in circumstances where section 87(1) had not been fulfilled by the creditor and was to be of no effect, the Act would have declared that termination void. It doesn't. The termination is voidable at the option of the debtor.

 

[3] The Debtor's Point of View

Third, let us look at the position from the ordinary man as debtor's point of view in a consumer credit situation.*

 

The DN is defective for failing to conform to the prescribed terms, or gives misleading information or at worse is plain nonsense so that the debtor does not know precisely what he has to do in order to comply with it and is consequently disadvantaged. Should the law disregard the fact that the creditor put the debtor at a disadvantage and thereby at risk the creditor might lawfully terminate the agreement?*

 

'This statute was plainly enacted to protect consumers, most of whom are likely to be individuals. When contracting with a large financial organisation they are at a disadvantage. The contract is likely to be in standard form and relatively complex with a number of detailed provisions. If the hirer is said to have broken its terms, the hirer needs to know precisely what he or she is said to have done wrong and what he or she needs to do to put matters right. The lender has the ability and the resources to give that information with precision. If he does not do so accurately then he cannot take what Mr Gruffyd conveniently referred to as "the next step".*[per Kennedy LJ in Woodchester v Swayne [1998]]

 

Moving on, if the debtor receives a notice from the creditor in which the creditor expressly states the contract is terminated, what is the debtor supposed to think? Would the law regard him as likely to think the creditor had terminated the contract or would the law regard him as thinking it had not terminated because strictly speaking, the creditor had served a default notice which was not in accordance with prescribed terms?

 

Or where perhaps the creditor did not expresly terminate but sent the bully boys over to demand the keys to the car. What was the debtor to think then? Would the debtor think the creditor had terminated?

 

It seems to me on the basis of the passages below, the courts will be ready to hold a creditor to his words and actions.

 

"... a person who signs a document, and parts with it so that it may come into other hands, has a responsibility, that of the normal man of prudence, to take care what he signs, which if neglected, prevents him from denying his liability under the document according to its tenor".

[per Lord Wilberforce in*Gallie v Lee*(1971)]

 

'.. a man cannot escape from the consequences, as regards innocent third parties, of signing a document if, being a man of ordinary education and competence, he chooses to sign it without informing himself of its purport and effect..'

[per Scott LJ in*Norwich & Peterborough Building Society v Steed*(1992)]

 

In short, the creditor is bound by his deed. All that is required is for the debtor to accept the creditor's termination. He can write saying 'thank you I accept you termination' or he can conduct himself in a way in keeping with that termination. Not paying the instalments would be in keeping with an acceptance of the termination.

 

[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] and 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.

 

Damage to Credit

A man's credit is damaged when it is impugned. He learns it is damaged when he seeks credit to fund a transaction and is turned away or when his creditors seek to call in debts. The effect can be simple embarrasment to being totally destabilising. A learned his credit was impugned when he was warned by his bankers. The damaging effect of the adverse reporting could have been a lot worse.

 

I had deliberately tried to keep my first post as simple and straight forward as I could. I hope this expanded version showing the way strands of law can intertwine to build a case is of assistance.

 

x20

[Bigdebtor]

you are almost there

 

you cannot make a DN "valid " by accepting an unlawful one

 

DD

 

I don't think I follow what you have said about accepting an unlawful DN.

 

What I think I am doing is accepting a TN which is an unlawful rescission - because the DN (sent only the day before the TN) didn't give me enough time to sort things out - so I only need to paying off the arrears as quoted - but I shall then be claiming comp0ensation for unlawful rescission.

 

Am i getting nearer to the right end of the stick?

 

BD

[Bigdebtor]

Vint

 

Thanks again - and your points above are well noted.

 

I have already tipped Pinky's scales - along with yours, Diddydicky, Welshman3 and others.

 

BD

[vint1954]

DD

 

I don't think I follow what you have said about accepting an unlawful DN.

 

Just because you have accepted the DN, does not make it valid or legal. A defective DN will always be defective.

 

What I think I am doing is accepting a TN which is an unlawful rescission - because the DN (sent only the day before the TN) didn't give me enough time to sort things out - so I only need to paying off the arrears as quoted - but I shall then be claiming comp0ensation for unlawful rescission.

 

What you are accepting is the unlawful rescission of the agreement. This comes under contract law and is not specifically dealt within the CCA 1974. You are accepting unlawful termination of the agreement following a defective DN.

 

Am i getting nearer to the right end of the stick?

 

BD

Closer, but read the sx20 thread that DD has posted.

[welshperson3]

you are almost there

 

you cannot make a DN "valid " by accepting an unlawful one

 

Hi diddydicky

 

I'm a Little bit confused by the above maybe we have crossed wires some were.

 

my thinking on this is that one party to a agreement can't unlawfully terminate.

so if one party tries to terminate and then the other party then agrees to the termination it becomes mutually agreed and at the point of agreement it becomes terminated, so bigbepters acceptance is for the termination and nothing to do with accepting the DN

 

WP3

[diddydicky]

2. If THEY send a termination notice based on you not complying with the requirements of a dodgy DN then the termination IS NOT VALID UNLESS YOU accept it in writing.

 

 

if you accept it in writing- it does'nt make it valid what you are (hopefully) accepting is their INvalid (unlawfulll) action

 

 

you have arrived:D

[welshperson3]

the important point is that you acept the termanation.

 

1 if it is unlawfuly termanated and you accept the termanation then the agrement ends.

2 if it is legaly termaneted by both partys then it ends.

3 so if the lender says that they are termanating and you agree then it is by mutual consent so it ends

 

my point being is as long as you accept the termanation all is well

 

wp3

Edited January 20, 2010 by welshperson3

[diddydicky]

the important point is that you acept the termanation.

 

1 if it is unlawfuly termanated and you accept the termanation then the agrement ends.

2 if it is legaly termaneted by both partys then it ends.

3 so if the lender says that they are termanating and you agree then it is by mutual consent so it ends

 

my point being is as long as you accept the termanation all is well

 

wp3

 

important

 

what you accept is the UNLAWFUL repudiation by the creditor!

 

the creditor, by demanding you now pay the whole of the balance or by terminating unlawfully, is now taking away from you a (the) major benefit of the agreement for you (the ability to repay at monthly amounts of your own choosing)

 

all you are saying in effect is "fine" if you're talking your ball back-, i'm taking my jumpers that were used for the goal posts

 

neither of you are "terminating" the agreement

 

because he has spat his dummy out and you cannot be expected to perform if he doesn't and you say so- then the agreement "naturally" terminates since you have both agreed not to play anymore

 

On the other hand you could have opted to say no- you cant just walk away- i insist that you keep playing

 

in which case if he refused you would have to accept it or sue for breach of contract

 

Doing nothing is regarded as accepting that you expect the agreement to endure

[BornAgainBiker]

woa, stop! what if a DN happens to be valid in its format, but the creditor has omitted to supply a credit agreement on a CCA request. what does one do in this scenario ? BAB

[cashins]

I must admit to not having followed this thread to closely and although competent on DN's, unlawful rescission is still rather a mystery.

 

What is coming accross loud and clear is that for termination, (after the demands of a DN being unsatisfied), is not valid unless accepted in writing by you. Clear so far!

 

I have more than one termination letter dating back 12 - 18 months. As in fact these were terminated on the backs of DN's I consider invalid, would the advice be even at this late stage to write now and accept?

 

David

[emandcole]

important

 

all you are saying in effect is "fine" if you're talking your ball back-, i'm taking my jumpers that were used for the goal posts

 

 

What a great way to think about it. Awesome anology I think