Invalid Default Notices

[alangee]

What about the fact that the creditor has trashed your credit record in the meantime, having defaulted you with the CRA's, despite not giving you the correct amount of time to remedy the breach? Is there a claim against them for breach of DPA?

 

Alan

[Lord_Alcohol]

Perhaps the Consumer Protection from Unfair Trading Practices Regulations ( 2008 ) (CPRs) might help, as it can when a lender misleads a debtor over a s78 request and commits a criminal offence or community infringement.

 

"A commercial practice is unfair if it is not professionally diligent and it materially distorts the economic bahaviour of the average consumer". It may be that a lender that fails to observe statute and insists on bringing an action against a debtor will fall foul of these regs and may even commit a criminal offence.

 

If CCA insists that an agreement endures without a compliant DN and if a creditor takes action based on that non-compliance, and if a court then sanctions that non-compliance by finding against the debtor, then I suspect that the CPRs could be invoked and an action started against the creditor.

 

Alternatively, if s170 is the problem, then could s140 be used instead/as well as?

 

Just a thought...

 

LA

[diddydicky]

What about the fact that the creditor has trashed your credit record in the meantime, having defaulted you with the CRA's, despite not giving you the correct amount of time to remedy the breach? Is there a claim against them for breach of DPA?

 

Alan

 

well there are two issues here

 

first as you say your credit character has been defamed- and simply removing the information would be closing the stable door after the horse bolted - si i would image there is a counter claim for damages - the more so if again you had previously alerted them to the fact that the DN was invalid

 

secondly, if they are to have their way- and the agreement endures, and the act requires that when a debtor is in breach the creditor must serve a valid DN and give the debtor the chance to remedy and revert to the status quo- as if the breach had never occurred- then the intent and purpose of s88 s89 are defeated since once the debtors credit character has been defamed- the "status quo" (s89) is impossible to acheive

 

again- i blame lawyers for running scared and looking after their own interests- there is enough ammunition for them to use but they seem unwilling- possibly they now have more lucrative streams of income

[diddydicky]

Perhaps the Consumer Protection from Unfair Trading Practices Regulations ( 2008 ) (CPRs) might help, as it can when a lender misleads a debtor over a s78 request and commits a criminal offence or community infringement.

 

"A commercial practice is unfair if it is not professionally diligent and it materially distorts the economic bahaviour of the average consumer". It may be that a lender that fails to observe statute and insists on bringing an action against a debtor will fall foul of these regs and may even commit a criminal offence.

 

If CCA insists that an agreement endures without a compliant DN and if a creditor takes action based on that non-compliance, and if a court then sanctions that non-compliance by finding against the debtor, then I suspect that the CPRs could be invoked and an action started against the creditor.

 

Alternatively, if s170 is the problem, then could s140 be used instead/as well as?

 

Just a thought...

 

LA

 

 

quite

 

an agreement which allows the creditor to act unlawfully without the ability of the debtor (save for expensive litigation) who is the one supposed to be being protected- from electing- as he would in any other contract- seems to me to be an agreement that would best be described as one regulated by the CPA (Creditor Protection Act)

 

UTTR for sure IMO

[alangee]

My OH had a DN from Sainsbury's, which is invalid due to length of time to repair breach. They subsequently sold it to Intrum Justitia. My wife wrote to both IJ and Sainsbury's informing them of the defective DN and accepting their unlawful repudiation. Sainsburys have now written back, accepting that DN was faulty, and is recalling the account from IJ. They go on to say that if she does not pay them, they will issue a issue a fresh default and register that with the CRA's.

 

Alan

[welshperson3]

After reading CCA section 170 I am of the opinion that we would have to work within the CCA rules so what do you think on the following?

 

 

 

Creditor issues an invalid DN he then takes court action.

When you get to court you then tell the judge that this case should not be there as the DN is invalid.

 

Judge says that you are right but you are only postponing the inevitable. As they can issue a new DN.

 

This is the important bit CAN THEY ISUE A NEW DN ?

 

76 Duty to give notice before taking certain action

 

(1) The creditor or owner is not entitled to enforce a term of a regulated agreement by—

 

(a) demanding earlier payment of any sum, or

 

(b) recovering possession of any goods or land, or

 

© treating any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred,

 

172 Statements by creditor or owner to be binding

 

(1) A statement by a creditor or owner is binding on him if given under—

 

section 77(1),

 

section 78(1),

 

section 79(1),

 

section 97(1),

 

section 107(1)©,

 

section 108(1)©, or

 

section 109(1)©.

 

(3) Where in proceedings before any court—

 

(a) it is sought to rely on a statement or notice given as mentioned in subsection (1) or (2), and

 

 

(b) the statement or notice is shown to be incorrect,

 

 

the court may direct such relief (if any) to be given to the creditor or owner from the operation of subsection (1) or (2) as appears to the court to be just.

 

 

Now the statement he has given (DN) is binding on him so how can he just issue a new DN if the first one is binding ?

 

A second DN is invalid as he is bound by the first.

 

THE RULES SAY THAT A CREDITOR IS BOUND BY HIS WORD UNLESS THE COURT GRANTS SUCH RELIEF

 

The first thing that a creditor would have to do is to try and get relief from his first DN if he don’t then he is bound and I cant see how a second DN is a valid DN if he has not sought relief from the first.

 

The argument would now have to focus on why he shouldn’t be granted such relief.

 

If I go in to all the argument this post will end up like a book but basically the CCA is for the protection of unsophisticated consumers and if he is allowed relief this would just defeat the object of the CCA.

[welshperson3]

My last post is based on the same principles as when a creditor sends out a settlement figure and you pay it, even if it is wrong they cant come back later and tell you the figure is Wrong and you owe us more.

They have to go to court to get relief from the settlement figure they sent out.

If they don’t get relief then its over

Edited October 10, 2010 by welshperson3

[Lord_Alcohol]

secondly, if they are to have their way- and the agreement endures, and the act requires that when a debtor is in breach the creditor must serve a valid DN and give the debtor the chance to remedy and revert to the status quo- as if the breach had never occurred- then the intent and purpose of s88 s89 are defeated since once the debtors credit character has been defamed- the "status quo" (s89) is impossible to acheive

 

That is a seriously good point.

 

However, as pt has pointed out, s170 would seem to rule out suing for compensation from the OC under CCA. It may therefore be sensible to look elsewhere for remedial action, such as DPA or the new Euro regs like CPRs.

 

Does anyone know what happened after the Woodchester judgement? Eg, did the judge consider that the agreement was voided by Woodchester's duff DN or did Swain carry on with the contract?

 

LA

[Bill Shidding]

Hi Welshperson,

 

172 Statements by creditor or owner to be binding

 

(1) A statement by a creditor or owner is binding on him if given under—

 

section 77(1),

 

section 78(1),

 

section 79(1),

 

section 97(1),

 

section 107(1)©,

 

section 108(1)©, or

 

section 109(1)©.

 

Now the statement he has given (DN) is binding on him so how can he just issue a new DN if the first one is binding ?

 

A second DN is invalid as he is bound by the first.

 

I understand your train of thought, however, the section mentioned above does not refer to DN's (sec 87/88).

If DN's were binding on creditors, then the first DN would be the only one a creditor could send (per breach).

It is widely agreed here that a creditor can send numerous DN's, but if the final DN is non-compliant and he then terminates the agreement, his goose is/was cooked.

 

Bill

[welshperson3]

Above are examples but how can a creditor making a statement in legal written document and not be bound by it? They have stated their intentions so I am at a loss to see how the law would allow them to take no responsibility for their actions

 

(It is widely agreed here that a creditor can send numerous DN's, but if the final DN is non-compliant and he then terminates the agreement, his goose is/was cooked.)

 

section 170 CCA is an issue now

Edited October 10, 2010 by welshperson3

[Bill Shidding]

Above are examples but how can a creditor making a statement in legal written document and not be bound by it? They have stated their intentions so I am at a loss to see how the law would allow them to take no responsibility for their actions

 

Sorry welshperson3, took me a while to find this -

 

"... 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)]

 

Bill

[frettful38]

There are nearly 5000 posts on the subject of DN's and we are still no wiser as to where we legally stand. As soon as we see that some of us are getting somewhere with a faulty DN some thing new pops up and then we are all back to square one.

 

I think we all need to know once and for all where we stand legally and what our rights are regarding receipt of faulty DN's and our contracts terminated.

 

We all know the score what happens to the consumer/debtor when he can't/does not or is unable to pay. You get a charge on your house, ,made bankrupt, kicked to the kerb, wait a few years and I am sure that Clegg & Cameron will bring in hanging if we go a £1 overdrawn.

 

The lenders/bankers get off scott free like they did in the bank charges refund case. I just think that the harder we try and abide by the law these institutions are the ones trying to find every and any loophole to keep us trapped in such a system that some of us see no end to getting out of.

 

Saying that however does not put me off like many others and I will not be surprised that this judgement that PT was referring too will probably be bad news once again for the consumer so I will not hold my breath. They are just trying to close all gaps and cracks that are in their agreements and chop and change as they see fit.

 

Lets see what this so called test case will bring, after the Heath and Walker case I for sure will not be checking every minute I get for the results. Sorry for the rant, but sick and tired of not having anything solid to hang on and would be great we could at least win one battle for a change.

[welshperson3]

Sorry welshperson3, took me a while to find this -

 

"... 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)]

 

Bill

 

Exactly bill

There are enough examples to show that that they are responsible for what they send

But yet us unsophisticated debtors are supposed to allow them to keep sending dodgy DN until they hit on with a right one?

[Bill Shidding]

Hi frettful, I agree with your post 100%, there are no precedents (yet) that support or shoot-down the dodgy DN/unlawful termination argument. My feelings are that the courts are all too cosy with the banks to upset them.

Taking into account consumer law precedents/decisions since Rankines, how many have fallen on the side of the borrower? Is it by chance that the banks are insolvent?

I sincerely hope the recent cases are not "set ups".

 

Welshperson, IMHO, once an agreement is "believed" to be terminated by the creditor, and that termination is accepted by the borrower, the agreement is no longer regulated by the CCA74. It is a contract, like any other business contract and subject solely to case law governing contracts.

 

We really need a (fair) test case.

[welshperson3]

The Consumer Protection from Unfair Trading Regulations 2008

 

Aggressive commercial practices

 

7.—(1) A commercial practice is aggressive if, in its factual context, taking account of all of its features and circumstances

 

any threat to take any action which cannot legally be taken

 

 

Offences relating to unfair commercial practices

 

8.—(1) A trader is guilty of an offence if—

(a)he knowingly or recklessly engages in a commercial practice which contravenes the requirements of professional diligence under regulation 3(3)(a); and

(b)the practice materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product under regulation 3(3)(b).

(2) For the purposes of paragraph (1)(a) a trader who engages in a commercial practice without regard to whether the practice contravenes the requirements of professional diligence shall be deemed recklessly to engage in the practice, whether or not the trader has reason for believing that the practice might contravene those requirements.

[diddydicky]

After reading CCA section 170 I am of the opinion that we would have to work within the CCA rules so what do you think on the following?

 

 

 

Creditor issues an invalid DN he then takes court action.

When you get to court you then tell the judge that this case should not be there as the DN is invalid.

 

Judge says that you are right but you are only postponing the inevitable. As they can issue a new DN.

 

This is the important bit CAN THEY ISUE A NEW DN ?

 

76 Duty to give notice before taking certain action

 

(1) The creditor or owner is not entitled to enforce a term of a regulated agreement by—

 

(a) demanding earlier payment of any sum, or

 

(b) recovering possession of any goods or land, or

 

© treating any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred,

 

172 Statements by creditor or owner to be binding

 

(1) A statement by a creditor or owner is binding on him if given under—

 

section 77(1),

 

section 78(1),

 

section 79(1),

 

section 97(1),

 

section 107(1)©,

 

section 108(1)©, or

 

section 109(1)©.

 

(3) Where in proceedings before any court—

 

(a) it is sought to rely on a statement or notice given as mentioned in subsection (1) or (2), and

 

 

(b) the statement or notice is shown to be incorrect,

 

 

the court may direct such relief (if any) to be given to the creditor or owner from the operation of subsection (1) or (2) as appears to the court to be just.

 

 

Now the statement he has given (DN) is binding on him so how can he just issue a new DN if the first one is binding ?

 

A second DN is invalid as he is bound by the first.

 

THE RULES SAY THAT A CREDITOR IS BOUND BY HIS WORD UNLESS THE COURT GRANTS SUCH RELIEF

 

The first thing that a creditor would have to do is to try and get relief from his first DN if he don’t then he is bound and I cant see how a second DN is a valid DN if he has not sought relief from the first.

 

The argument would now have to focus on why he shouldn’t be granted such relief.

 

If I go in to all the argument this post will end up like a book but basically the CCA is for the protection of unsophisticated consumers and if he is allowed relief this would just defeat the object of the CCA.

 

the DN is issued under s87 .......... s87 is not included in the list

[basa48]

I wonder what is the status of a DCA that has bought (under presumably a legal assignment) a debt following an invalid DN and TN?

 

And what do people think of a DN that asks for the full balance as remedy? This surely disadvantages the debtor to an unacceptable level, far beyond de minimus? Presumably a judge would argue it was invalid as is the termination and the agreement is 'live'.

 

Surely a creditor cannot argue the agreement is still 'live' after an impossibly defective DN. A non sophisticated debtor is not to know it is invalid and would have no chance raising the cash to remedy and has not paid for several months.

 

I wonder what the arrears would be?? and how could it be worked out as several months of arrears were only because the debtor thought the agreement was terminated and he had to raise the whole balance.

[diddydicky]

Hi Welshperson,

 

 

 

 

 

I understand your train of thought, however, the section mentioned above does not refer to DN's (sec 87/88).

If DN's were binding on creditors, then the first DN would be the only one a creditor could send (per breach).

It is widely agreed here that a creditor can send numerous DN's, but if the final DN is non-compliant and he then terminates the agreement, his goose is/was cooked.

 

Bill

 

 

the problem being that it now appears to be the vogue that until the creditor serves a valid dn- the termination was not valid so the agreement endures

[diddydicky]

I wonder what is the status of a DCA that has bought (under presumably a legal assignment) a debt following an invalid DN and TN?

 

And what do people think of a DN that asks for the full balance as remedy? This surely disadvantages the debtor to an unacceptable level, far beyond de minimus? Presumably a judge would argue it was invalid as is the termination and the agreement is 'live'.

 

Surely a creditor cannot argue the agreement is still 'live' after an impossibly defective DN. A non sophisticated debtor is not to know it is invalid and would have no chance raising the cash to remedy and has not paid for several months.

 

I wonder what the arrears would be?? and how could it be worked out as several months of arrears were only because the debtor thought the agreement was terminated and he had to raise the whole balance.

 

exactly- the very act that supposes to be for the protection of the consumer and which it has been ruled in the high courts that the creditor must serve a DN with "precision" lets the consumer down when he needs the protection most

[welshperson3]

if we have to deal with this within scope of the CCA then the only way i can see is if the creditor is bound by his words and actions,effectively tied to his first DN

 

so heads together and lets see how it can be done

[The Mould]

The Courts need to justify why a defective Default Notice invalidates the Termination of the agreement.

 

A compliant Default Notice merely entitles the creditor to enforce payment for the full balance outstanding on the account under the agreement after the debtor has breached the agreement.

 

For the Court to declare that the agreement endures because a defective default Notice was served by the creditor, [is] imposing a sanction upon the creditor.

 

If the two parties to the agreement agree that it is terminated, then the Court has no right to interfere and if the DN is defective then the creditor has swept the ground from under his own feet and therefore deprived himself of his rights of entitlement as stated under s87/88 CCA 1974 (as amended).

 

Justification is required, why does the agreement endure simply because the DN is defective?

 

Kind Regards

 

The Mould

[frettful38]

Many a good points and arguments presented and put forward by fellow caggers........another thing that I was thinking about was to add the unreasonableness of the creditor prior to them serving a DN on the consumer. Whether the DN is faulty or not.

 

A DN is not issued after one missed payment by the consumer. The majority of consumers get in to personal difficulties, especially since the recession began and I believe they try their best to try and come to some sort of arrangement to pay their debts..........but the majority of creditors do not accept what token payments are put forward to them IMO. It is only after a few months of trying to get the creditor to agree that they go ahead and issue a DN all the same. A lot of creditors go and sell the debt to a DCA's even whilst they have received a valid ACCOUNT IN DISPUTE LETTER., but I won't go in to that right now.

 

I had been trying to negotiate with my lender for over a year and even though I sent in 3 I & E financial statement forms they still refused. I then made a complaint to the FOS and only then did my lender agree to accept £1 a month where initially I was offering £10 a month.

 

It was only after reading about faulty DN's that I discovered mine was one of them. The point is that I tried everything I could to stand up to my responsibilities and try and come to a sensible solution and tackle my debt to my lender but each and every time my offers were refused. Now there is no doubt that my lender was/is behaving beyond reasonable so where does that leave consumers like me, and after trying to find the best and in my case the only way forward I have/am being treated like something from another planet. Then can you blame the consumer for trying to use what these lenders have been using against the consumer all these years.

 

The lenders are using the laws and regs and every loophole they can to get the consumer back in the web of lies and deceit they have/had woven..........and now that the consumer has learned the truth about their rights and have escaped the web they were entangled in woven by these lenders can you blame them for not wanting to get stuck in the web again.

 

Does this make sense or have I been watching too many horror movies lately? LOL!

[Bill Shidding]

Maybe "estoppel by representation" could be pleaded, where the creditor suddenly realises the error during proceedings.

As up to that point, the creditor had intended/believed the agreement to be terminated, and had even claimed the full amount on the POC. An official/legal letter from a creditor would generally be taken at face value by a debtor.

 

The debtor, being a person of limited legal knowledge, may have acted to his detriment by interpreting the CCA74 as an absolute authority, and had understood the DN to be ineffective (by its non-compliance with the terms of sec88).

Any subsequent termination by the creditor being voided, according to the statute.

 

Thereby, the debtor ignored the DN/TN/FD as a non-compliant/illegal demand.

 

The only good point (I can see) where a court deems the agreement live, is that the debtor could immediately request a time order, in certain circumstances.

[emandcole]

Ok, if we run with this notion of an invalid DN meaning any subsequent termination was ineffectual (so the account is still live) it means that contractually speaking we are only obligated to pay the monthly sum due and arrears to bring the account back into order.

 

Remember, as the debtor you are 'allowed' to breach the agreement with non-payment and you will be warned and perhaps fined for doing so but this doesn't end the agreement. You can pay and then the contract endures as if no breach ever happened.

 

So, you're now standing in court. The claimant or the court announce that as the DN was shoddy then technically the termination is invalid and the agreement is still live. Can't you then, on hearing the decision, then accept their termination once again and hand them a pre-prepared letter of acceptance?

 

You are after all in court for the demand of the whole balance and the court has just announced the agreement is still live. What then are you doing in a court with the claimant demanding the full sum if the agreement is still in fact alive?

 

Irrespective of the timing the moment the court announces the agreement is live and any former dodgy DN and termination was ineffectual you are surely free to then quickly 're-accept' the unlawful termination, if the account is live you quite simply should not be in court there and then defending a demand for the full balance.

 

If the agreement is still live then the claimant surely cannot proceed anyway as the sums claimed on the original PofC will be inaccurate (going from the full balance to just the monthly arrears).

 

If the court announces the agreement is still live then from that point on the claimant would have to then 're-serve' a valid default notice, valid termination and valid letter before action extending your right once more to remedy the breach before they are entitled to take you back to court.

 

The court can't just dismiss the dodgy DN and termination by declaring the account is therefore still live and immediately go on to award the full balance to the claimant in court. Either its still live, so the claimant will have to go back and 'do things correctly' or it is terminated meaning your acceptance has to be valid.

 

Of course, if you've already defended the action and the claimant has lost (which they must have done if the court announced their original default and termination was incorrect) then they'd need permissin of the court to bring the same action back.

 

Is there by the very act of the creditor claiming their original DN and termination was not binding (in an attenpt to escape your letter of acceptance) an equally dangerous scenario for the creditor then being open to further and immediate acceptance there and then in court, or later on when you've already defended the same claim they'd previously just lost.

 

Maybe I'm being a touch simplistic here but the creditor can't have it both ways can they? There must be a pitfall in there somewhere as they jump around and try to excuse their earlier notifications to you?

[diddydicky]

The Courts need to justify why a defective Default Notice invalidates the Termination of the agreement.

 

A compliant Default Notice merely entitles the creditor to enforce payment for the full balance outstanding on the account under the agreement after the debtor has breached the agreement.

 

For the Court to declare that the agreement endures because a defective default Notice was served by the creditor, [is] imposing a sanction upon the creditor.

 

If the two parties to the agreement agree that it is terminated, then the Court has no right to interfere and if the DN is defective then the creditor has swept the ground from under his own feet and therefore deprived himself of his rights of entitlement as stated under s87/88 CCA 1974 (as amended).

 

Justification is required, why does the agreement endure simply because the DN is defective?

 

Kind Regards

 

The Mould

 

 

im not quite sure how you arrive at this conclusion- if the court rules that the dn is defective and therefore the ensuing termination is also not valid then this is not a sanction on the lender - it is a bonus- the court is saying- " no matter what you do wrong- the agreement endures until you get it right" - and that whereas in any other contract situation the injured party could make an election - under this- the consumer PROTECTION act- the consumer is "locked in" to an agreement that the creditor can terminate by virtue of the consumers breach-simply by giving notice via a DN - but the consumer has no way of terminating if the creditor is in breach

 

if that is what the CCA intended or is not a UTTR i'll pull my leg off and chew the soggy end!